Money, Language, Thought

Translating Fed Speak

I

William James was often ridiculed by Oxbridge philosophers, particularly Bertrand Russell and G. E. Moore, for his “slangy” language, especially his willingness to deploy monetary metaphors in explaining how truth was mobile, plural, and pliable because it “worked on a credit system.”

At home, the lyrical Left led by Lewis Mumford was equally contemptuous of James, and of pragmatism, and for the same reason. For example, in The Golden Day (1926), which codified an American literary canon, Mumford argued that James’s “consistent use of financial metaphors” was proof of the “pragmatic acquiescence” to the ravages of modern-industrial capitalism.

In 1947, in Eclipse of Reason, Max Horkheimer, a founder and exemplar of the Frankfurt School, reiterated the charge, accusing John Dewey of validating the “prevailing business culture” by portraying truth as James had, as a fungible property that was created and exchanged on credit, by borrowing against the future.

II

Case closed, right? Maybe not. Recall what Georg Simmel suggested in The Philosophy of Money (1900, 1907).:“the understanding of the essence of money is not only facilitated by its interaction with intellectuality, which gives money and intellectuality a formal similarity, but perhaps also by an underlying principle that is manifested in their historical development.” In other words, thinking is something like contriving equivalents where there are none except by resort to the metaphorical means made available most plentifully in money, which allows us to see equal value in unlike things.

Simmel was no doubt remembering what Friedrich Nietzsche had to say in Essay 2 of On the Genealogy of Morals (1887; my italics), where he equated economic calculation and thinking as such, then suggested that a naive canon of justice derived, ultimately, from the metaphorical reach of money:

“The feeling of “ought,” of personal obligation [had] its origin in the oldest and most original personal relationship that there is, the relationship between buyer and seller, creditor and ower . . . . Making prices, assessing values, thinking out equivalents, exchanging—all this preoccupied the primal thoughts of man to such an extent that in a certain sense it constituted thinking itself. . . . Sale and purchase, together with their psychological concomitants, are older than the origins of any form of social organisation and union: it is rather from the most rudimentary form of individual right that the budding consciousness of exchange, commerce, debt, right, obligation, compensation was first transferred to the rudest and most elementary of the social complexes (in their relation to similar complexes), the habit of comparing force with force, together with that of measuring, of calculating.

“With that ponderous consistency characteristic of ancient thought, which, though set in motion with difficulty, yet proceeds inflexibly along the line on which it has started, man soon arrived at the great generalisation, ‘everything has its price, all can be paid for,’ the oldest and most naive moral canon of justice, the beginning of all ‘kindness,’ of all ‘equity,’ of all ‘goodwill,’ of all ‘objectivity’ in the world.”

III

With these examples in mind, let us remember how MLK calculated the outstanding debt owed to black Americans, in that speech now made infamous by those who would make justice blind to the measurable historical effects of white racism. In writing the Declaration and the Constitution, King explained, the founders were “signing a promissory note to which every American was to fall heir,” meaning that every person “would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness.”

It was a fiduciary obligation that had long since come due: “But it is obvious today that America has defaulted on this promissory note in so far as her citizens of color are concerned. America has given the Negro people a bad check, a check which has come back marked ‘insufficient funds.’ We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.”

King’s resort to the sturdy, quintessentially American metaphor of bank credit didn’t demean his just cause or degrade his exalted purpose, which was to ground the black freedom struggle in the original intent of the founders. Quite the reverse. He knew the Declaration didn’t begin with indisputable premises deduced from a list of obvious or acceptable truths. Instead it opens with an acknowledgement that the truths which do serve as the premises of what is to follow are themselves contingent matters of mutual agreement on earth, not divine principles ordained from on high: “We hold these truths to be self-evident.” King used the ordinary language of everyday life to illustrate and to advocate those truths, which by the late-20^th century had become trans-historical, and to that extent metaphysical, only because Americans had insisted on it.

IV

So “the money of the mind” is simply the currency thought uses as a matter of course in its search for the resting place of belief, where truth abides. In these terms, to speak of the “cash value” of an idea, as James did, or to insist that “truth works on a credit system,” is not to demean the procedures or the results of thinking—it is, if anything, to marvel at the very existence of thoughts, to understand them as partaking of the lowest common cultural denominator and participating in the highest possible morality, all at once.

To write philosophy in this key is to address the human condition as it exists in all its varieties, at every level of discourse, rather than to conduct thought experiments or to ask questions that we know can’t yield any meaning because the grammatical structure of the obvious answers leads to nonsense, or to other regions of nowhere. To think in this register is to refuse the either/or choice between ordinary language and metaphysics, as Stanley Cavell and many others frame the difference between the Anglo-American analytic and the Continental traditions in philosophy.

V

Turn now to the opaque language of one who both pronounces and acts on financial issues, a man who speculates to make a living. This is Mohamad A. El-Arian, former bond trader and CEO at Pimco, now professor at the Wharton School and Senior Global fellow at the Lauder Institute there, author of two books, and Chief Economic Adviser at Allianz.

In a recent essay at Project Syndicate, the editorial clearing-house that distributes op-eds to 400 + newspapers worldwide, El-Arian claims that a radical reorganization and a fundamental reorientation of the Fed are coming; but without the headline—”Get Ready for a Long Overdue fed Overhaul“—you wouldn’t know this, because the prose is so anodyne that you could put your child to sleep by reading it out loud.

He fears that the Fed’s two missions—to keep inflation within an upward boundary of roughly 2% annually, and to strive for “full employment” ( = maximum of 3.5% unemployment)—are now at odds. But he doesn’t sound all that afraid.

“Historically, policies that advanced one objective did not undermine the other. Today, however, these imperatives are pulling in opposite directions—and dividing Fed officials. While the ‘hawks’ remain focused on price stability, pointing out that both core and headline inflation are running around one percentage point above the Fed’s target, the ‘doves’ are becoming increasingly concerned about weakening labor-market indicators.”

The actual indicators themselves have gone missing, of course, because the man who would be king doesn’t want to see numbers that contravene his version of reality, if there is still room for such a concept in what remains of his mental capacity. No matter. “Flying blind” is what the Trump administration does best, preferably with loads of shit in the bomb bay.

VI

The Fed does have another mission, and that is to keep the banks honest—to make sure they don’t bake the books, to see that the assets they own are sufficient to serve as collateral against the liabilities they have incurred. It’s an increasingly impossible task in view of hedge funds, private equity, special investment vehicles, crypto currencies, and all the other elements of “shadow banking,” but it is essential. Notice how El-Arian glides over this regulatory imperative (“ensuring financial stability”):

“Complicating this tug-of-war [between inflation hawks and employment doves] is the Fed’s third, implicit mandate —ensuring financial stability —which is complicated by bubble-like developments in some markets, with risk-taking and dubious funding practices on the rise.”

Implicit? Bubble-like? Hello? There are huge bubbles in AI infrastructure investment and in crypto, just for starters, because income from expenditures on both is absent, unpredictable, or unlikely, and the electric grid needed to sustain the retail use of AI is decrepit and already overloaded. The dollar looks weaker every day, even as the stock market climbs over the top of new records every week, because tariffs have torn up international trade by disrupting fragile supply chains, but there’s no place outside that market for a “global savings glut” to go, not if the potential reward is to outweigh the obvious risk.

Meanwhile, the kids are definitely not all right. If they were born in the 1990s, which would make them 20 or 30-something today, all they have known is trans-national terrorism, financial panic, economic crisis, death by virus, state-sponsored genocide, and political nihilism. They’re not marrying, or reproducing, or buying homes, or even having sex on a regular basis, and not because they don’t want to. The Great Recession, the precarity of a “gig economy,” and the impending erasure of entry-level jobs requiring advanced cognitive skills have foreclosed on these prospects, which were once taken for granted as options available to sentient adults without criminal records.

Besides, who wants to leave the house if there’s nothing but risk waiting on the other side of the door?

VII

Here is how El-Arain acknowledges these alarming realities:

“Addressing the Fed’s shortcomings—[policy mistakes were made, says El-Arian]—could not be more urgent. We are on the brink of a transformational productivity boom, driven by innovations like AI, robotics, and life sciences. These technologies have the potential to increase the speed limit for non-inflationary growth, creating a promising scenario of high output without high prices. But they also raise the risk of new policy mistakes, especially if employment is decoupled from growth. In this new era, a strong economy may be accompanied by a weakening labor market.”

All right, parse this paragraph with me. Ask yourself, how do these technologies create the possibility of faster growth without inflation? What is El-Arain assuming that makes a “transformational productivity boom” seem plausible? Yes, the right answer is growth “decoupled” from employment, higher output of goods without any increased inputs from labor, that is, from human beings. “Wage-push inflation”—you know, like when workers demand a return on their increased productivity in the form of higher wages—is off the table if these technological innovations can replace human beings at the pace now promised by the promoters of AI.

This is the scandal of Fed speak, the detachment of money and moral questions. When William James used the American idiom of financial metaphors to explain the variability and plurality of truth, he was making an abstraction concrete by demystifying the fetishism of the universal commodity—that is, money—by showing us how every claim to the truth is a bet on the future, as in “We hold these truths to be self-evident.” That is where promises get kept, where our confidence in each other’s truths gets verified, where we give each other some credit.

When El-Arian dispenses with the metaphor, money becomes just another means to profitable ends as these are to be determined by experts with superior access to information, with no wider human cost attached to its use. Now it’s just a tool, a technical detail of central banking to be discussed by the bankers themselves.

I would prefer not to indulge this denatured language. It sounds like Oxbridge philosophy to me. And sure enough, El-Arian is a former president of Queens College at Cambridge University.