Peter R. Fisher spent more than a decade working at the Federal Reserve Bank of New York. In this excerpt from the new documentary “The Power of the Fed,” he has a warning about the actions of the Fed system of which he was once part.
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“I feel as anxious today as I’ve ever felt about the financial world, because of my belief that the Fed has been pumping up asset prices in a way that is creating a bit of an illusion,” Fisher tells FRONTLINE correspondent James Jacoby in the new documentary “The Power of the Fed.” “And I think it — I think the odds are now sort of one in three, very high, that we will look at this as an epic mistake and one of the great financial calamities of all time.”
Fisher, who left his role as executive vice president and manager of the System Open Market Account of the New York branch of the nation’s central bank in 2001, is just one of the former and current Fed insiders who speak with FRONTLINE in the new documentary, along with economists, journalists and titans of finance. From the award-winning investigative team behind “Amazon Empire” and “The Facebook Dilemma,” “The Power of the Fed” examines the roots of the Federal Reserve’s attempt to avert financial crisis when COVID-19 struck and how the institution continues to pump billions of dollars into the financial system daily, more than a year later — a process Fisher criticizes.
The Fed’s response to COVID, the film finds, is the latest chapter in an experiment begun after the 2008 crash that involves both lowering interest rates to almost zero, and creating new money and injecting it into the financial system in a process called “quantitative easing. That experiment has been dramatically changing the American economy ever since — and was ramped up in a big way when the coronavirus pandemic hit, the filmmakers find, helping to stave off total economic collapse.
“We’re lucky that the government was successful, or we could be living through a true depression,” Lev Menand, a former economic advisor to the Fed and the Treasury Department, says in the film.
While well-intentioned, the Fed’s experiment has delivered mixed results over the years, some experts say in the documentary, with the biggest benefits going to Wall Street rather than Main Street, wealth inequity widening and the risk of inflation growing.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, defends the Fed’s actions and impacts on the economy in the documentary.
“The Fed has been on a mission, I’ve been on a mission, to put Americans back to work and help them get their wages up, especially for those lowest-income Americans,” Kashkari says. “And if it’s had some effect on Wall Street, to me, the tradeoff is well worth it, if we can put Americans back to work, so that they can put food on the table, they can take care of themselves. That is profoundly beneficial to society.”
Watch “The Power of the Fed” in full starting July 13: https://to.pbs.org/3hH4Z85
The correspondent is James Jacoby. The writers and producers are Anya Bourg and James Jacoby. The co-producer is Megan Robertson. The senior producer is Frank Koughan. The documentary is supported by The WNET Group’s Chasing the Dream, a public media initiative that examines poverty, justice and economic opportunity in America.
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FRONTLINE is produced at GBH in Boston and is broadcast nationwide on PBS. Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by the Ford Foundation. Additional funding is provided by the Abrams Foundation; the John D. and Catherine T. MacArthur Foundation; Park Foundation; and the FRONTLINE Journalism Fund with major support from Jon and Jo Ann Hagler on behalf of the Jon L. Hagler Foundation and additional support from Koo and Patricia Yuen. Support for The Power of the Fed is provided by The WNET Group’s “Chasing the Dream,” a public media initiative that examines poverty, justice, and economic opportunity in America, with major funding by The JPB Foundation and additional funding from The Peter G. Peterson and Joan Ganz Cooney Fund.