Mirror, mirror on the wall
Who makes us so un-equal?
Answer, thee, this white-haired head:
Could it be our very Fed?

* * *

Of that little ditty, which fetched up on our typewriter as Halloween approaches, we are put in mind by Janet Yellen’s speech on inequality. The Fed’s new chairwoman delivered her remarks earlier this month at a conference at Boston. She noted that the “past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression.”

The “extent of and continuing increase in inequality in the United States greatly concern me,” Mrs. Yellen declared. “By some estimates,” she noted at one point, “income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.”

What’s so striking about this speech is Mrs. Yellen’s lack of self-awareness. There is no hint that she sees a possibility, imagined by the poet quoted above, that the Federal Reserve itself is the culprit. Yet it strikes us that by her own timeline, the rise in inequality of which she complains started showing up after America’s default under the Bretton Woods Agreements and the enactment in the 1970s of a system of fiat money.

We have made this point several times, because it’s so glaring and because no one else is pressing it. In “Yellen’s Missing Jobs,” we sketched the coincidence between the enactment of the system of fiat money and the soaring jobless rate. We marked the point in respect of Britain in “George Soros’ Two Cents.” And in “The Anti-Piketty,” about Steve Forbes new book on money, we focused on the coincidence how inequality began rising in the age of fiat money.

One of our favorite newspapermen, Joseph Joffe of Die Zeit, looked at us across a dinner table not long after that editorial was issued and said, “Yes, but someone needs to determine whether fiat money is a cause or a coincidence.” He’s right as rain. But one doesn’t have to be an economist to imagine how the advent of fiat money empowers the those who make their living in the financial markets over those who don’t.

It’s not just the employment picture, either. There’s also bankruptcies. This is the focus of the work at Harvard Law School of Senator Warren. She wrote about it in her autobiography, “A Fighting Chance,” and we wrote about it in “Elizabeth Warren’s Chance.” She is alarmed that the bankruptcy rate, which had been perking along for decades under the gold standard at under two per a thousand Americans, suddenly shot up in the 1970s.

Mrs. Warren doesn’t mention it, but this trend begins right after the collapse of Bretton Woods. The left would like to deal with the rising unemployment, the rising inequality, and the rising bankruptcies by constructing ever more expensive programs to be run at taxpayers’ expense out of Washington and ever more expensive regulatory regimes from the same quarter. There is going to be hell to pay when voters take account of the fact that these programs end up compounding the problem. It’s a kind of monetary version of the old Halloween racket known as “trick or treat.”