Why have US conservatives, and not the left, monopolised political fury since the banks went down? This timely polemic by one of the best leftwing commentators provides the answer

In October 2010, American liberals held their largest demonstration in Washington DC since the great crash of 2008. They did not raise their angry voices to denounce fantastic corporate greed and fraud. They were not furious that speculators had destroyed the hopes of millions of Americans. Instead, they staged the world's first protest against anger – a rage against rage.

Its organisers, comedians Jon Stewart and Stephen Colbert, exhorted their followers at the "Rally to Restore Sanity" to wear "I'm With Reasonable" T-shirts – ironically, of course – and set aside political differences in the interests of getting on with their neighbours. Despite the subsequent Occupy Wall Street movement, the pattern Stewart and Colbert set has held. Genteel liberals have allowed American conservatives to all but monopolise political fury since the banks went down. Considering what conservatives allowed financial markets to do, the fact that the right could be furious with anyone but itself is an astonishing story and one that Thomas Frank was born to cover.

Frank's speciality is how conservatives have appropriated the language and passions of the left. In The Conquest of Cool (1997), he looked at how the counterculture became capitalist culture. One Market Under God (2000) was a more muscular demolition of the corporate populism that enabled billionaire CEOs to pose as the common people's firmest and truest friends. What's the Matter With America? (2004) took Frank back to his native Kansas, as he tried to explain why a state that was once a hotbed of leftish populism was now so Republican George W Bush did not need to waste time campaigning there. And yet, despite everything he knew, the Tea Party's success in returning the Republicans to power in the 2010 congressional elections and making them viable contenders for the presidency in 2012 floored even him.

"If you had brought the world's teenaged anarchists together in some great international congress and asked them to design an ideal crisis," he says, "they could not have discredited market-based civilisation more completely than did the crash of 2008." As evidence, he offers the reader pre-crash editions of Trader Monthly – the US Eequivalent of the FT's grotesque celebration of conspicuous consumption, the How to Spend Itcorrect magazine. It instructed Wall Street bankers and dealers to impress their friends with $20,000 bottles of Johnnie Walker, private jets and, my favourite, a $300,000 turntable that acted as a "huge middle finger to everyone who enters your home". After asking why speculators would want to greet their guests in such a manner, Frank draws the obvious conclusion. "If ever a financial order deserved a 30s-style repudiation, this one did. Its gods were false. Its taste was bad. Its heroes were oafs and brutes and thieves and bullies. And all of them failed, even on their own stunted terms."

But when they failed, and wiped around $16tn dollars off American household wealth,when they rubbed the taxpayers' noses in the dirt by appropriating their money to refresh their bonuses, the last thing ordinary Americans did was imitate their ancestors from the 30s. Afghan and Iraq war veterans did not march on Washington DC. Farmers did not block highways. The majority of the electorate did not demand that their politicians bring the arrogant boss class to heel. Contrary to the expectations of respected Washington commentators, the most potent force in the land became a radical movement for business deregulation.

With as much patience as he can muster, Frank writes: "Before this recession, people who had been cheated by bankers almost never took that occasion to demand that bankers be freed from 'red tape' and the scrutiny of the law. Before 2009, the man in the bread line did not ordinarily weep for the man lounging in his yacht."

There are two reasons, apart from his dazzling style, why Frank is one of the best leftwing writers America has produced. He comes from the midwest and there is a solidity behind his work that one associates with the sturdiness of the American heartlands. He regarded the culture wars as distractions from old-style, populist economic arguments against the power and pelf of the plutocracy. (And who can now deny that events have proved him right?) Second, although he wears his learning lightly, Frank always puts in the legwork. He has trudged round the Tea Party rallies and reports that what liberals like to think about the Republican right misses the point.

It is not a racist movement, reacting against the election of America's first black president. Leftish journalists may seize on the odd Ku Klux Klannish comment from "birthers", but the language of the Tea Party as a whole is politically correct. Indeed, it refuted the racism charge when it briefly decided that its favourite for the Republic presidential nomination was one Herman Cain, a grasping and, allegedly, groping executive from the pizza trade, who was far "blacker" than Obama. Nor do the obsessions with abortion and gay marriage of the old Christian conservatives move it.

The new Republicans are utopians, who reacted to a crisis of capitalism by arguing that the fault the calamity revealed was not that America was too capitalist but that it was not capitalist enough. The propaganda of Rand Paul, for instance, imagines a monster from Washington scooping up Wall Street. Far from the financial system corrupting a succession of Democrat and Republican administrations and ruining the state, the state was engaged in a brutal takeover of free institutions. Fox News claims that liberals secretly engineer recessions so they can extend socialism. Newt Gingrich compares Obama's Washington to Nazi Germany and the Soviet Union.

Their arguments make no sense. They deplore the bailout of the banks and then bewail any measures to prevent the banks being bailed out again as a tyrannical imposition on the sacred market. Frank's essential argument is, however, that the right did not have to make sense because it provided the only vehicle for popular anger. The vacuity of Jon Stewart, Stephen Colbert and the "reasonable" liberal demonstrators was not a one-off. Obama came to power in circumstances as grim as those that greeted Roosevelt in 1932. But he was more MOR than FDR. He allowed publicly subsidised speculators to keep on receiving other people's money. He did not challenge Wall Street's power over Washington but brought Larry Summers and other discredited Wall Street Democrats of the Clinton era back into the White House. Obama never understood or wanted to understand that you can only win political arguments by taking them to your opponents and building a consensus for change. Democrats did not tell the angry public why their system had run aground and offer an alternative. They allowed the right a free run.

Before I read this book, I assumed that the extremism of the Tea Party would guarantee Obama a second term, however dismal his performance in office had been. Now I am not so sure. A Republican victory would at least teach the leaders of Britain and Europe's centre-left parties that they cannot support systems, whether in the City or the eurozone, that crush their supporters' livelihoods. Cheering though that would be, a rightwing White House would also hand what is left of America's public space to incontinent and unthinking demagogues who are so lost in dreams of capitalist utopianism that not even the sound of the greatest crash since 1929 can wake them.