Book Description
Allan H. Meltzer's monumental history of the Federal Reserve System tells the story of one of America's most influential but least understood public institutions. This first volume covers the period from the Federal Reserve's founding in 1913 through the Treasury-Federal Reserve Accord of 1951, which marked the beginning of a larger and greatly changed institution.
To understand why the Federal Reserve acted as it did at key points in its history, Meltzer draws on meeting minutes, correspondence, and other internal documents (many made public only during the 1970s) to trace the reasoning behind its policy decisions. He explains, for instance, why the Federal Reserve remained passive throughout most of the economic decline that led to the Great Depression, and how the Board's actions helped to produce the deep recession of 1937 and 1938. He also highlights the impact on the institution of individuals such as Benjamin Strong, governor of the Federal Reserve Bank of New York in the 1920s, who played a key role in the adoption of a more active monetary policy by the Federal Reserve. Meltzer also examines the influence the Federal Reserve has had on international affairs, from attempts to build a new international financial system in the 1920s to the Bretton Woods Agreement of 1944 that established the International Monetary Fund and the World Bank, and the failure of the London Economic Conference of 1933.
Written by one of the world's leading economists, this magisterial biography of the Federal Reserve and the people who helped shape it will interest economists, central bankers, historians, political scientists, policymakers, and anyone seeking a deep understanding of the institution that controls America's purse strings.
"It was 'an unprecedented orgy of extravagance, a mania for speculation, overextended business in nearly all lines and in every section of the country.' An Alan Greenspan rumination about the irrational exuberance of the late 1990s? Try the 1920 annual report of the board of governors of the Federal Reserve. . . . To understand why the Fed acted as it did—at these critical moments and many others—would require years of study, poring over letters, the minutes of meetings and internal Fed documents. Such a task would naturally deter most scholars of economic history but not, thank goodness, Allan Meltzer."—Wall Street Journal
"A seminal work that anyone interested in the inner workings of the U. S. central bank should read. A work that scholars will mine for years to come."—John M. Berry, Washington Post
"An exceptionally clear story about why, as the ideas that actually informed policy evolved, things sometimes went well and sometimes went badly. . . . One can only hope that we do not have to wait too long for the second installment."—David Laidler, Journal of Economic Literature
"A thorough narrative history of a high order. Meltzer's analysis is persuasive and acute. His work will stand for a generation as the benchmark history of the world's most powerful economic institution. It is an impressive, even awe-inspiring achievement."—Sir Howard Davies, Times Higher Education Supplement
Customer Reviews:
Not for the layman.......2003-12-12
This much heralded account of the Federal Reserve is justly lauded in academic circles because Meltzer brings forth many Fed documents which have long been buried away and unavailable to scholars. He is able to pursue step-by-step Fed actions and relate what happened in all those many meetings behind closed doors. Through the mass of information he has uncovered and his own in-depth knowledge of monetary policy and the Fed, he is able to bring new facts to light and correct previous interpretations that are more often than not those of Friedman and Schwartz's A Monetary History of the United States.
The weaknesses of Meltzer's book stem from his massive archive of information and the strength of his predecessors. The sheer volume of information he is trying to convey prompts the narrative to drift and the reader sometimes loses the point. And, as a good academic historian, he is engaged in a dialogue with other historians of the Fed and monetary policy that can push the layman to the sidelines. Meltzer's history assumes the reader has a rather advanced knowledge of economics and finance such as an understanding of the real bills doctrine and the operation of an international gold standard. Also, the charts and tables are often not very helpful in understanding the text or at least could have been presented in a better manner.
Overall, Meltzer does not produce any stunning revelations but a great many correctives to previous accounts and much added detail. The novice to the history of US monetary policy would do better to read Richard Timberlake's book (though taken with a grain of salt because of its conservative leanings) or the classic work by Milton Friedman and Anna Schwartz.
Amazon.com
Bob Woodward called his biography of Federal Reserve chairman Alan Greenspan Maestro for two reasons. First, Greenspan is a musician. He started out as a Julliard-trained jazz sax man. "He wasn't a good improviser," Woodward reports. And while the other guys got stoned all night, Greenspan "read economics and business books and eventually became the band's bookkeeper." He also cultivated powerful pals, like Ayn Rand, whose coterie dubbed the dour young man "The Undertaker."
More profoundly, Greenspan is a maestro, a conductor, exquisitely attuned to every instrument in the political and economic orchestra. He rules by consensus, but with a firm hand and notoriously inscrutable words. Marvelously, Woodward relates that Greenspan had to propose twice to his wife, the violinist-turned-TV news star Andrea Mitchell, before she understood: "His verbal obscurity and caution were so ingrained that Mitchell didn't even know that he had asked her to marry him." Woodward gives us the inside story of what Greenspan really thinks and how he outmaneuvered the most ruthless politicians on earth in some of the hairiest times imaginable, from the 1987 stock market crash to the 1994-95 Mexican crisis to the stomach-churning turn of the century. It turns out that for all his awesome knowledge of monetary minutiae, the Fed chief literally relies on "a pain in the pit of my stomach" to make decisions. "At times, he found his body sensed danger before his head," writes Woodward. The Fed chief also adapts Einstein's technique to economics, hunting for discrepancies as keys to deeper theories. Einstein made breakthroughs out of bent light; Greenspan deduced productivity gains that government statisticians had overlooked for years. (The gains appeared when Greenspan made the statisticians calculate productivity by business sector, the way it's done in the real world.)
Woodward's prose is cool and rational, not exuberant. But if you're into economics and politics, you'll find a rich gossip trove here. Who knew Reagan had a draft of a presidential order to shut down Wall Street trading at hand in 1987? Scary! Reading Maestro is better than sitting with Greenspan in his famous tub as he charts your future--it's like being right there inside his head. --Tim Appelo
Book Description
Perhaps the last Washington secret is how the Federal Reserve and its enigmatic chairman, Alan Greenspan, operate. In Maestro, Bob Woodward uses his proven interviewing and research techniques to take you inside the Fed and Greenspan's thinking. Woodward presents the Greenspan years as a gripping narrative, a remarkable portrait of a man who has become the symbol of American economic preeminence.
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Woodward's bestselling "The Agenda" presented a thrilling, intimate portrait of the making of economic policy during President Clinton's first year in office. The author now returns to the economic arena to examine why and how the present boom came to be.
Customer Reviews:
"The nurturing of capital and property ownership.".......2007-09-10
While there are some interesting tidbits throughout, ie Alan Greenspans association with Ayn Rand, the familiar names of the politically entrenched and the precarious state our nations economic machinations, this book was a bit boring. What I did find fascinating was the level of Ivy League ambition in our nations capital and Greenspans savvy manuevering therein.
Maestro Review .......2007-08-19
Among collegiate literature which I have been exposed to, I have found Bob Woodward's Maestro to be one of the most informative and educational. With this simple and easy to understand narrative, I have been taken inside the doors of the Federal Reserve, and have been given a picture of how the FOMC truly operates. I feel more equipped to discuss and express opinion towards the operations of the Fed. Upon the completion of this book, I sat back with a sense of gratification, in my newly acquired, practical understanding of the U.S. economy. Woodward was able to portray Monetary Policy in a sense that really applied to my level of thinking.
With an inside look at the decisions of Alan Greenspan and his role as chairman of the Federal Reserve, I was stuck with a sense of amazement watching this man operate mathematically and politically, still maintaining a sense of pure awareness and concern for the long-term affects of his resolutions. I would definitely recommend this book to any reader in search of a practical and realistic understanding of the economic engine which drives the U.S.
I Can't Believe I LOVED a Book on Greenspan!.......2007-04-10
I read this book wanting to be better informed about how The Fed and Greenspan operate, and wound up being nicely informed and entertained. Understanding how banks, the White House and political appointments co-exist in the field of economics, I never thought I would ever use the phrase "hard-to-put-down" in connection with an economics/banking book but this one really did it for me. It is a genuine page turner and definitely Woodward's most underrated and under-discussed books. (No caller mentioned this work during his 3-hour C-Span interview a few months back.) Get your hands on a copy of this book and prepare for an interesting and enjoyable ride. My one complaint: I wish it were longer. Although this book answered all my "Fed" questions, I wished its time track would continue to the present, or perhaps delve a little deeper into the past. But this minor complaint notwithstanding, the book was an excellent and engaging read.
Maestro.......2006-12-02
First, a brief note about what others have stated about the author and his relationship with the "establishment." Bob Woodward has always gotten close to the sources and heart of the story. It seems Woodward is inside and part of the system much moreso than than simply observing and reporting about it from the outside. In "Maestro," perhaps such conjecture is irrelevant. (Some biographers are more sympathetic to the subject.) If one is on the inside he/she has greater access to corroborated information and gets to know what's really going on behind the scenes.
The downside is that a person can also develop relationships with the people they write about (e.g. become friends, or admiring acquaintances). Insider or not, Woodward is and has been....a part of the establishment. But this isn't necessarily a reason to take anything away from him in this book. Woodward provides lots of details into Greenspan, the FOMC, and daily working of the Fed, as well as the politics and motivations behind individual and institutional actions.
This bio starts with brief glimpses into Greenspan's parents, his upbringing, and school days. It then moves to his young adulthood and formative years. The young Greenspan was 26 when he met philosopher and novelist Ayn Rand. He held many discussions with her and became a part of her inner circle. Then, as now, Greenspan believes in the philosophy of "Logical Positivism," which asserts that "nothing could be known rationally with total certainty."
"Maestro" spends a lot of time on the workings, structure, and politics of the Fed. As for the structure of the Federal Reserve Board, the President appoints board members to the Fed and the Senate confirms them, to a term of 14 years. These lengthy terms are designed to position the board members above politics. The appointments however, are influential and political. The Secretary of Treasury traditionally acts as a liaison between the administration and board members.
The FOMC is the Federal Open Market Committee, (then) chaired by By Greenspan. The FOMC has 12 voting members, seven of which which, are Fed Governors. 5 of are presidents (out of a total of twelve) of the Federal Reserve district banks in the U.S. The FOMC meets every six weeks to discuss and set the the short-term funds rate.
This book also notes how Greenspan's statements are interpreted by the media and the markets that react to them.
Greenspan's famous and carefully crafted ambiguous statements are misinterpreted, oversimplified, and over-reacted to constantly by the 'talking heads' and knee-jerk profit takers and short-termers.
It's become so common in recent years to listen to talking heads Analyze phrases, words, and sentences given by Greenspan (and now Bernanke) when they present reports and testimony. Below is one example of what commonly happens after the Fed Chairman utters his alphabet soup of ambiguity, as in this 1995 comment from Allen Greenspan:
"I don't see any problem that really disturb me" followed by, "As a consequence of the sluggish economic outlook, the probabilities, as some of my colleagues have indicated, of a recession have edged up, as indeed one would expect." This statement was made in 1995 at an international banking conference in Seattle .
Here are two major headlines responses to this statement:
"Greenspan Sees Chance of Recession" --The New York Times.
"Recession Is Unlikely, Greenspan Concludes" --The Washington Post.
Greenspan refers to these responses by the media and talking heads as "Constructive Ambiguity" (p. 147).
The Chairman of the Federal Reserve and board is considered to be the most important position in the governance and overseeing of the U.S. economy. This book makes a mundane topic and institution interesting.
One thing I liked about Greenspan. He believed in an "institutional rule of survival" in Washington: bring the bad news yourself. Look people in the eye, lay out the facts, and be direct (p. 53).
Some people think there is an element of fawning in this biography. Sometimes there seems to be some subtle praise. Aside from this, the media's categorization of Greenspan as a 'rock star' is oversimplified. It seems Woodward liked Greenspan's tenure. A lot of people did.
How to feel your way to the correct interest rate.......2006-05-03
Woodward will give you a feel for how Greenspan feels (this feeling is developed from massive amounts of economic dated and dicussions with other experts) his way along to a decision on interest rates. There is no clear-cut method for getting the interest rates to just the right level. Now that Greenspan is gone and left us with a boom, we have to be concerned that Ben Bernanke will also develop just the right feel. And probably more importantly--may he be just as lucky as Alan Greenspan.
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The Strategy and Consistency of Federal Reserve Monetary Policy, 19241933 (Studies in Macroeconomic History)
David C. Wheelock
Manufacturer: Cambridge University Press
ProductGroup: Book
Binding: Hardcover
 Economic History
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Money & Monetary Policy
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Public Finance
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General
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ASIN: 0521391555 |
Book Description
Today, most scholars agree that mismanaged monetary policy contributed to the length and severity of the Great Depression. There is little agreement, however, about the causes of the Federal Reserve's mistakes. Some argue that leadership and other organizational changes prior to the depression caused a distinct change in policy strategy that lessened the Fed's responsiveness to economic conditions, while others contend that there was no change in the Fed's behavior, and that errors during the depression are traceable to previous policies. This book examines the policy strategy developed by the Federal Reserve during the 1920s and considers whether its continued use could explain the Fed's failure to respond vigorously to the depression. It also studies the effects on policy of the institutional changes occurring prior to the depression. While these changes enhanced the authority of officials who opposed open-market purchases and also caused some upward bias in discount rates, Wheelock concludes that monetary policy during the depression was in fact largely a continuation of the previous policy. The apparent contrast in Fed responsiveness to economic conditions between the 1920s and early 1930s resulted from the consistent use of a procyclical policy strategy that caused the Fed to respond more vigorously to minor recessions than to severe depressions.
Book Description
The Federal Reserve banking system was created in 1913 in an effort to bring coherence to nationwide banking practices and prevent crises like the financial panic of 1907. Since it began operating in 1914, the Federal Reserve has played a crucial role in determining American financial policy and practice. It is largely an entity unto itself, operating independently, rarely subject to the political machinations of Congress or the presidency. Yet few Americans know how it works, and even fewer know anything of its history.
This history of the Federal Reserve begins by giving an overview of American banking practices before the Federal Reserve's formation. The events leading to the Reserve's creation, and its early trials and tribulations, are then documented. Subsequent chapters track the Federal Reserve's history: its role during times of financial and military crisis, its relationship to each presidential administration, and the Fed's evolution as its leadership has changed over the years. The history wraps up with the Alan Greenspan era, explaining major changes in the institution's operating procedures since the 1980s. An appendix lists all members of the Federal Reserve Board of Governors, from its formation until 2003.
Customer Reviews:
The Court and Its Chairman At A Pivotal Time........2005-09-05
Greenspan was the Chairman of the Federal Reserve Board for many years and cultivated the money men to influence his thinking.
He's called "the most powerful man in the world" and yet there has always been a sense of mystery which surround his private life. Coming from Washington Heights in New York where he lived wiht his grandparents, to become a power proker of the "first Order," he excelled in how to manage money and control economic crises. He was pivotal in America's economic expansion. Now, that he is retiring, the United States of Europe are taking over as the superpower of the wealthy.
Author Justin Martin detaials Greenspan's training as an economist. Using the opinions and knowledge of his peers, Henry Kissinger, Milton Friedman and former U. S. Predsident Gerald Ford, who appointed him to the Federal Reserve. He served under five presidents on the Federal Reserve Board and Chairman. In the photo section, he is shown with former presidents Gore, Clinton, Reagan, Nixon, and Bush, Sr.
Before that heady position, he excelled in academics and music at George Washington High School; in the '43 yearbook, he was listed as taking part in orchestra, dance band, was class president, and labeled as "smart as a whip and talented." He was a musician at Julliard, and played clarinet and saxophone as he toured with Henry Jerome's jazz band and in a trio. Learning the strict precision of playing instruments aided him in making complicated decisions as Chief Justice of this august group.
He hobnobbed with the wealthy at the O'Conner parties, including Allen Blumenthal in the mid '50s. Nothing keep him from marrying two beautiful women. Like Prince Charles of England, he had two women in his first marriage, a young beauty and Ann Rand who played a big role in his life. She was his Camilla. An old man never learns, even a smart one -- he married again in 1997 to a 'dead ringer' of his first wife. This time he married up into society.
Just as another super hero of an earlier era, Nathan Bedford Forrest, the greatest Civil War General (according to Robert E. Lee), he was the target of cartoonists (not comics!). In one, he is one of the five "enduring national monuments" in Washington, D.C. In another, the favorite of Justin Martin's aunt (her contribution to the book), he's shown being "tempted" by dancing naked women whose large proportions had prominent n....s. holding banners for the dot com groups.
As a teenager with rolled up jeans, he is talller than his mom, Rose Goldsmith, who held the Bible when he was sworn in as Chairman of Council of Economic Advisers in 1974. He's shown in the Oval office under the portrait of George Washington (what's more appropriate?) with Bush, Sr. and cronies.
To end with a riddle: How many bankers does it take to screw in a lightbulb? One, Greenspan holds the bulb and the world revolves around him. That's the story of his life. He is certainly an exceptional individual, a marvelous government servant as opposed to the two giving me "what-for" right now
Very timely and important reading.......2004-12-08
The Federal Reserve banking system was created in 1913 to stabilize banking practices: while it's often in the news today, few Americans actually know the background of its creation and its effects on American lives. Donald Wells is a professor of economics from the University of Memphis with extensive studies in baking: his guide, The Federal Reserve System: A History, provides not just a review of the Federal Reserve's establishment and effects, but a survey of the entire American banking system. Very timely and important reading.
Book Description
Every sixth human being in the world today is an Indian, and every sixth Indian is an untouchable. For thousands of years the untouchables, or Dalits, the people at the bottom of the Hindu caste system, have been treated as subhuman. In this remarkable book, at last giving voice to India's voiceless, Narendra Jadhav tells the awe-inspiring story of his family's struggle for equality and justice in India. Based on his father's diaries and family stories, Jadhav has written the triumphant story of his parents--their great love, unwavering courage, and eventual victory in the struggle to free themselves and their children from the caste system. He vividly brings his parents' world to light and unflinchingly documents the lives of untouchables--the hunger, the cruel humiliations, the perpetual fear, and the brutal abuse. Untouchables is an eye-opening work that gives readers insight into the lives of India's 165 million Dalits, whose struggle for equality continues even today.
Book Description
Stanley Fischer served as First Deputy Managing Director of the International Monetary Fund from 1994 to 2001. IMF Essays from a Time of Crisis collects sixteen essays written for the most part during his time at the IMF, each updated with Fischer's later reflections on the issues raised. The IMF drew much criticism for some of its actions during Fischer's tenure, and he vigorously defends the "battlefield medicine" practiced by the IMF during a series of economic crises, which included the problems of economic transition in the former Soviet bloc and the Asian financial crisis. Fischer addresses the subsequent calls for reform of the international financial system and makes the case for the IMF as an international lender of last resort.
The first section of essays, "The Role of the IMF and the Reform of the International Financial System," considers the IMF's role in the international financial system in light of the crises of the 1990s. The second section, "Macroeconomic Policy, Stabilization, and Transition," examines such topics as exchange rate regimes, inflation, and Eastern Europe's relation to the European Union. The final section, "Poverty and Development," reflects Fischer's basic belief that economic policies should explicitly target poverty reduction. These engaging and accessible essays will appeal not only to economics students, economists, and policymakers but also to the general reader interested in the international monetary system.
Customer Reviews:
Insightful!.......2004-04-23
This lucid, plain, straightforward book is not necessarily the sort of thing one expects from an economist, yet author Stanley Fischer is one of our era's greatest economists. His work at the International Monetary Fund put him on the front lines during some of the twentieth century's most serious economic crises and panics. He has a unique and valuable perspective. His timely discussion of the IMF and the World Bank provides a sobering antidote to the rhetoric of both globalization and anti-globalization. Fischer reminds us that the IMF's many glaring failures and imperfections are the stumbles and flaws of an organization that has done good work to further a noble purpose. It also has proven willing and able to change when the facts do. For good reason, Fischer's essays sometimes read like the arguments of a defense attorney countering prosecutorial accusations. The IMF has come in for so much criticism in recent years that it is refreshing to discover so many points in its favor, and we find it both fair and prudent to consider them carefully.
Insightful!.......2004-03-09
This lucid, plain, straightforward book is not necessarily the sort of thing one expects from an economist, yet author Stanley Fischer is one of our era's greatest economists. His work at the International Monetary Fund put him on the front lines during some of the twentieth century's most serious economic crises and panics. He has a unique and valuable perspective. His timely discussion of the IMF and the World Bank provides a sobering antidote to the rhetoric of both globalization and anti-globalization. Fischer reminds us that the IMF's many glaring failures and imperfections are the stumbles and flaws of an organization that has done good work to further a noble purpose. It also has proven willing and able to change when the facts do. For good reason, Fischer's essays sometimes read like the arguments of a defense attorney countering prosecutorial accusations. The IMF has come in for so much criticism in recent years that it is refreshing to discover so many points in its favor, and we find it both fair and prudent to consider them carefully.
Average customer rating:
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Federal Reserve System: A History of the First 75 Years
Carl Moore
Manufacturer: McFarland & Company
ProductGroup: Book
Binding: Library Binding
General
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ASIN: 0899505031 |
Book Description
For more than 100 years since its inception, the United States struggled through a variety of financial problems, crises, and would-be solutions to the problems of currency, credit and financial stability. On December 23, 1913, Woodrow Wilson signed into law the Federal Reserve Act, creating a "monster" patterned after the central banks of Europe yet still uniquely American. Throughout the years, this system has served the nation well. This is the first complete discussion of the workings of the system to date-the early history, organization, leadership, evolution and development, and major figures. Appendices include the original Federal Act (not readily available elsewhere) and numerous reference tables covering 1914-1989.
Customer Reviews:
The First 75 Years.......2006-03-21
The Federal Reserve System, by Carl H. Moore
Moore uses coded language when saying "the market setting interest rates and prices" (p.3). The "market" is a code word for the power of Big Banks whose self-interest seldom corresponds to "the greatest good for the greatest number". The old problem of free-market banking is that there was "no lender of last resort" (p.4). This created the many money panics during the 19th and early 20th century in America. But the Federal Reserve System created, or did not prevent, the Great Depression (1929-1949) that was worse than anything in the 19th century! People disliked the idea of Big Banks having control of the money supply and the economy; their practical experience taught them this (p.6).
Page 7 summarizes the Federal Reserve Act. Federal Reserve Banks receive deposits of current funds, etc. (the money deducted from your paycheck). The Fed then loans this money to the Government. The Fed earns interest also from their paper currency which they lend to the Government! National Banks have to give 6% of their funds to their Federal Reserve Bank (p.11). When the European war occurred, it affected finance in this country: loans were called, stocks sold, currency became tight, commodity exchanges closed (p.23). Would the Fed restrain lending to stop inflation if it reduced their income (p.30)? Federal Reserve Notes were meant to provide a currency that could be expanded or contracted to meet business needs (pp.35-36). Money panics are described on pages 37-38. Inflation is impossible as long as bank notes are issued only against actual commodities ('real bills'). But WW I created new financing for the Allies (pp.43-45). One victim of the war was the gold standard; we got "managed currencies" (p.48).
The 1920s saw great speculation in stocks and bonds, low farm prices and heavy debt for agriculture; the Fed did nothing (pp.57-58). Increased production and dropping demand couldn't be resolved (p.67). The New Deal saw more changes than in any other period in our history (p.75). The problems of the 1930s would have been prevented with more prosperity (p.89)! But monetary actions cannot create economic stability (p.98). The increased volume of checks led to machine processing with preprinted numbers (p.124). More people were affected by the Fed in the 1960s. Silver coins were devalued in the 1960s (p.135). Next came the gold standard in 1971 (excessive amount of paper currency). This was followed by a tripled discount rate, skyrocketing gasoline prices, and a doubled federal debt. Inflation would not go away, there was high unemployment and a stagnant economy (p.140). Congress now required quarterly reports and Senate confirmation (p.142). If the Fed announced future plans it could create conditions that would negate these plans. The 1970s saw other changed (pp.150-151). Inflation galloped without control (p.152).
The appointment of Paul Volcker led to a halting of inflation. This was followed by bank failures from insider deals and fraud (p.156). The Financial Deregulation Act of 1980 forced all banks to pay the Fed for its services. The United States shifted from a creditor to a debtor nation (p.163)! The 'Look Back' summarizes the first 75 years of the Fed. It could NOT eliminate the business cycle (which could arise from variables in the weather, or human error). Will the United States create such a huge national debt as to cause its destruction, as with other nations (p.169)? This book would be better if oriented to the general reader. The last 100 pages of statistics are meaningless, but known to insiders like the author.
Amazon.com
An author who tries to write an engaging book about the International Monetary Fund faces a daunting task. Who besides devoted readers of The Financial Times would want to read it? With The Chastening, however, Paul Blustein offers a remarkably accessible account of this off-putting institution and its importance to the world economy. "The IMF cultivates its mystique, seeking to appear all-knowing, scientific, and detached. To outsiders, it often comes across as a high priesthood with pretensions of divine powers and insight," he writes. Blustein tears down this façade as he recounts some of the epic struggles of recent years: "As markets were sinking and defaults looming, the guardians of global financial stability were often scrambling, floundering, improvising, and striking messy compromises." Through dozens of interviews with IMF insiders, Blustein reveals how the institution really works--and how it often doesn't. There are fast-paced stories of success and failure on these pages, as Blustein describes efforts to bail out faltering economies in Korea, Russia, and elsewhere. Best of all, readers don't need economics degrees to keep pace: anybody who simply wants a primer on global financial systems will be well served by Blustein. --John Miller
Book Description
The breathtaking behind-the-scenes story of the nearly disastrous global financial crisis of the late 1990s and how the International Monetary Fund tried-and failed-to stop it.
At a time when the IMF has become the object of intense political controversy, The Chastening is the first book to provide a behind-the-scenes look at the Fund during an extraordinarily turbulent period in modern economic history. Based on interviews with more than 200 officials at the IMF, the World Bank, the U.S. Treasury, the Federal Reserve, the White House and many foreign governments, The Chastening recounts the struggle to stem the financial crisis that flared in Thailand in mid-1997 and spread to three continents. Its disquieting conclusion: at a time when massive flows of money traverse borders and oceans, the IMF is often woefully ill-equipped to safeguard the global economy or to combat virulent new strains of investor panics.
The IMF and its overseers have cultivated the image of masterminds coolly dispensing effective economic remedies. But the reality, as Washington Post economics correspondent Paul Blustein shows, is that as markets were sinking and defaults looming, the guardians of global financial stability were often scrambling, floundering, improvising, feuding among themselves and striking messy compromises. The Chastening--important and fascinating reading for anyone interested in business, finance, and economics-=will chasten readers out of any sense of complacency.
Customer Reviews:
A Primer on Why Third World Debt Is Such a Mess.......2007-01-01
There are many good reasons to bash the IMF but few reasons to do so if you don't know what you're talking about -- this books lets you do both.
I've spent years in social circles that carry on a tragic lament of third world debt to first world countries, a lament I agree with but often find is expressed through oft-repeated anti-globalization mantras with no perception of how hideously complex the situation is.
This book gives you the tools to make cogent criticisms of the IMF while simultaneously learning about the herculean chore the IMF has before it. Blustein describes the mechanics of how financial crises arose in the fateful year of 1997 in Thailand, Indonesia, Malaysia, and Korea, and later in Russia and Brazil. A combination of cookie-cutter shock therapy schemes, out-of-touch IMF officials, incompetent and often corrupt finance ministry officials and Wall Street Bankers converge to make it nearly impossible for countries to escape the wrath of an increasingly volatile group of investors the author appropriately dubs the "Electronic Herd."
The pattern is now a familiar one -- irresponsible fiscal and monetary policy leaves a country exposed to predatory lenders and currency speculators. Investors and debt holders see the country's dwindling hard currency reserves as sign of imminent collapse and begin to sell off every asset they have there, creating a vicious circle of panic. The IMF is called in to make sure the country doesn't go bankrupt by providing loans of hard currency -- but who's being bailed out, the country itself of the lenders that put their money there?
Blustein explains how this dynamic was repeated in each of the countries of the 1997 and 1998 crises, with the IMF response working in everyone's favor in only two cases among a string of dismal failures. He extensively explores the issue of "moral hazard," or the idea that big loan packages to economies in crisis just reinforces irresponsible behavior on the part of both the lenders and the borrowers.
Can get a little tedious at times, and the sequence of events is sometimes hard to follow because so much is being explained at once -- but overall a well written work by a reporter who covered the subject for years.
A Case Study in the Failure of Political Rationalism.......2006-09-26
The Chastening is a ripping, white-knuckle read. This IS the best single book about the IMF, but it is also a lesson in political theory. Like Milton Friedman's "Monetary History of the United States," David Halberstam's "The Best and the Brightest," and Robert Conquest's "Harvest of Sorrow," this book is a case study in how superempowered and unaccountable bureaucrats tend make natural disasters incalculably worse. It is an object lesson in how policymaking ambitions are frustrated by human fallibility, especially when the policymaker in question fails to account for that fallibility. At every step, the Fund's planners made horrible missteps with smug confidence, thereby prolonging the suffering of untold millions of people. At every step, they were shocked when reality failed to coorespond to theory and their best intentions backfired. In a subtle way, the doctrinaire rationalist approach taken by the Fund during the Asian crisis presages the failure of the remaking of Iraq. The inherent weakness of theory-laden, top-down political and economic planning is a lesson we must apparently learn over and over again. (For those who appreciate this philosophical dimension to the book, I highly recommend James C. Scott's "Seeing Like a State.")
The IMF is the most powerful single human force on the planet and yet it remains totally almost unknown to public at large. Blustein is to be commended for making the Fund transparent and accessible to all educated people.
Entertaining & Imformative.......2006-08-16
Clearly the best book ever written on the IMF & its inner-workings. Great detail on the theater and players within the IMF and those that make policy. The book is a must read for anyone interested in the world economy.
Regarding the crisis that hit the world financial markets the author does an outstanding job in educating the reader on all of the key elements from Nation/States to Hedge Funds.
By taking individual chapters to break down the elements of the distressed finances of Korea, Indonesia, Russia, Brazil, Thailand & wall street the author takes us on a roller coaster ride of international politics, high finance, intrigue & history.
1997.......2006-01-04
1997, S Korea banking system was on the verge of collaspe, as result of violatile banking practices that had destabled the financial system threating the 11th largest economy of the world and created the possibility of financially crippling long term companies like Hyundia, Samsung, and Daewoo. At the time the IMF began analyzing S Korea's financial condition, S Korea bank reserves stood at $24 billion. IMF's, Neiss had no idea how close the S Korean banks were to default and when Neiss arrived in S. Korea the reserves had already fallen to $9 billion and dropping $1 billion a day. Foreign banks were demanding payment on loans come due and the practice of routinely extending payments month after month was canceled causing a massive amount of money due. The short term debt to foreigner was $20 billion. Foreigners on the currency exchange were dumping the won for the dollar and investors were executing a massive selloff of Korean stocks and bonds. When Neiss arrive S Korea was within a week of default. If S Korea defaulted, the default could cause a long and crippling cutoff of loans and neighboring Asian countries might also fall into default and investment confidence could be shattered globally and the world fall into a global recession. The S Korea economic collaspe affected the US economy; in 1998, the bond market ceased to function as a provider of capital to the world; the fed was forced into sharp cuts in the interest rate, but the fed could not tame the savage beast of the global market. The global market beast was enormous. Foreign investment in the selling and buying of stocks and bonds and other securities had reached $17.3 trillion by 1997.
Neiss envisioned three responses to the crisis: 1. acquire a short term loan from Japan 2) gain permission to pay foreign loans in bonds rather than cash 3) stem the panic by showing the market that S Korea banks had plenty of cash. The IMF bailout infused $55 billion and $21 billion from the IMF. S Korea promised to cut budget amounts, raise interest rates, shutdown ailing financial institutions and close the doors, eliminate government direct bank loans, and allow greater freedom for foreign investors to buy stocks and bonds. The IMF bailout followed by a crash in the currency and economy of S. Korea. Financial credibility damage had occurred. IMF bailouts pattern of crashes after loan approval occurred with Thailand ($17 billion loan), Indonesia ($33 billion loan), Russia (1998 - $22 billion loan), and Brazil ($44 billion bailout loan). IMF bailout meant higher interest rates cooling fast growing economies. When a country fails to meet the target goals of the IMF, the IMF blames the government of the country for failing to meet the conditions of the loan. This tactic imposes censurorship and political influence entangling the IMF with the internal policies of the countries political machinery. 1999-2000, the IMF pronounced the Asia financial crisis over.
In fast growing Asian countries, hot money had poured inot these economies. Hot money could be liquidated with a push of a computer button by commerical banks and brokers. Hot money destabilized the S Korean financial systems and increased the violatility in the system.
Criticism of the IMF are it lacks expertise in banking issues, it closes banks and does not consider whether other banks can cover; it can not create money like the fed. In 2001, IMF war chest totaling $137 billion. IMF limitations to financial assets makes it vulnerable to rescuing failsafe countries that could trigger global financial collaspe. Once an IMF bailout is installed, the role of the IMF is too become the financial planner of the country forcing the country to reduce spending and increase income revenue.
Economists On A Mission.......2005-12-23
In Globalization and Its Discontents, Joseph Stiglitz claims that the Asian crisis could not have been achieved by market speculators and corrupt politicians alone: it required the involvement of economists, and more specifically of that breed of economists who populate the corridors of the International Monetary Fund, an institution charged with maintaining financial stability and extending credit to countries facing crises.
Although not a professional economist, Paul Blustein provides a more balanced account. Instead of invoking arcane theories and denouncing other people's incompetence to make his point, he sticks to the facts and reconstructs the story of the Asian crisis as people experienced it on the frontline. His most fascinating pages are when he follows IMF economists on rescue missions, from Bangkok and Jakarta to Seoul and back again. You can almost smell the sweat emanating from those figures uniformly clad in white shirts and dark suits, envision the nights spent working on spreadsheets in air-conditioned hotel rooms, feel the tension that reigns once the team has unearthed some unsavory data, witness the embarrassment of the authorities who are asked to spill open their books and confess their best-kept financial secrets, imagine the relief when things fall into place and the program proposal is ready to go to the executive board for approval.
One should not pity IMF economists. They live in poshy Washington, fly business class, stay in five stars hotels and, although they envy the paychecks of their Wall Street colleagues, manage to lead an international bureaucrat's life with a banker's salary. But one also has to acknowledge their high professional standards, their devotion to their tasks and their sense of discipline that contradicts the adage that economists can never agree with one another (remember Winston Churchill, who remarked that "if you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.")
Here is how IMF staffers are perceived by their colleagues from the World Bank, a sister institution located right across the street in downtown Washington:
"Economists from the World Bank, who sometimes work in joint missions with the IMF, express awe at the almost military manners in which Fund staffers defer to their superiors. This protocol is in stark contrast to the code of conduct at the World Bank, an institution devoted to long-term development loans, whose economists or irrigation specialists or environmental experts might embark on a lively disagreement right in front of, say, a borrowing country's deputy finance minister. When an IMF mission enters a room to conduct a negotiation, it is often easy to tell who ranks where; one World Banker likens it to "a mother duck leading her baby ducks." The mission chief typically sits in the middle of the table and does most of the talking, allowing immediate subordinates to chime in on issues requiring their specialized expertise; lower-level staffers are likely to remain silent."
Four year after its publication, the book still makes an interesting read. It could have been adorned with a more telling title (the "chastening" refers to the jacket of the hardcover edition which shows the IMF pilloried with a dunce's cap, as well as to the sense of awe when faced with the recurrence of financial crises that should chasten us all of any sense of complacency). It would also have benefited from the inclusion of a few pictures, and especially that famous snapshot that shows IMF Managing Director Michel Camdessus standing, arms crossed, looking down at President Suharto as he signed the revised multi-billion bailout package that was to provide a short respite to the country as it spiraled into chaos. A tell-tale picture, indeed.
Average customer rating:
- Clear
- A good blend of theory and historical evidence
- Accessible
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The International Origins of the Federal Reserve System
J. Lawrence Broz
Manufacturer: Cornell University Press
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The Black Swan: The Impact of the Highly Improbable
ASIN: 0801433320 |
Book Description
The Federal Reserve Act of 1913 created the infrastructure for the modern American payments system. Probing the origins of this benchmark legislation, J. Lawrence Broz finds that international factors were crucial to its conception and passage. Until its passage, the United States had suffered under one of the most inefficient payment systems in the world. Serious banking panics erupted frequently, and nominal interest rates fluctuated wildly. Structural and regulatory flaws contributed not only to financial instability at home but also to the virtual absence of the dollar in world trade and payments.
Key institutional features of the Federal Reserve Act addressed both these shortcomings but it was the goal of internationalizing usage of the dollar that motivated social actors to pressure Congress for the improvements. With New York bankers in the forefront, an international coalition lobbied for a system that would reduce internal problems such as recurring panics, and simultaneously allow New York to challenge London's preeminence as the global banking center and encourage bankers to make the dollar a worldwide currency of record. To those who organized the political effort to pass the Act, Broz contends, the creation of the Federal Reserve System was first and foremost a response to international opportunities.
Customer Reviews:
Clear.......2002-03-09
Broz provides an easy to read text. His premises are clear, leading to true understanding. I've read much on this subject, but never such a complete work. It is as economical as can be expected; and I would argue more general than others have claimed. I highly suggest this book, and thank Dr. Broz for his contribution.
A good blend of theory and historical evidence.......2000-02-25
Broz's "The International Origins of the Federal Reserve System" is a excellent example of how single-case qualitative empirical research should be done. By providing a detailed formal theory framework, Broz is able to derive specific hypothesis about the development of the Federal Reserve in a manner that is both scientifically rigorous and historically detailed. While comparison with other cases would have been helpful (and neccessary if the model is to be generalized), this book is one of the best qualitative works in political science in general and political economy in particular in years.
Accessible.......1999-09-29
You can't find a more accessible text for this topic. I have scoured the librarys of academia and find that this text is not only readable and enjoyable, but it is superior in its treatment of subject matter. A look at the index will tell any reader that Mr. Broz's volume is the compleat guide.
Don't miss your chance to read this welcoming introductory text.
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