By coincidence, it is tempting to ask, are these two developments related? Is the Fed surge a symptom or maybe even a contributing cause of America’s national crisis? In his latest book, journalist Christopher Leonard wants to convince us that it is both.
Leonard is the author of several works of the muckraking genre. Previous titles include “Kochland” and “The Meat Racket.” In “The Lords of Easy Money,” he explains how the central-banking elite pursued a policy of facing Janus. They defeated the power of conventionally understood inflation, while unleashing a whirlwind of financial speculation that benefited the top 10 percent, who own 84 percent of America’s shares, and especially the top 1 percent, who control 38 percent. Leonard doesn’t have much time for formal economics. He plays fast and loose with economic terminology and logic. But we get his point and it’s a good one. This is an age of loose money and very unevenly distributed benefits.
Instead of economics, Leonard’s favorite idioms are the standard stories and characters of American populism. “The Lords of Easy Money” revolves around a story of innocence being betrayed like an update of “The Wizard of Oz”. To summarize the history of the Fed over the past 50 years, Leonard traces the career of Thomas M. Hoenig, the son of an Iowa plumber who had stood in the ranks of the Kansas City Fed. Through Hoenig’s eyes, we see the interest rate shock of 1979 and the years that have passed under Alan Greenspan. As Leonard recounts, Hoenig overestimated the risks that excessive credit posed in dealing with bankrupt community banks and excessive oil loans. From 1991 to 2011 as president of the Kansas City Fed, Hoenig sat in the backseat to witness the dot-com boom and bust and the housing boom that followed. When the crisis hit in 2008, Hoenig supported the first round of emergency measures to prevent disaster. But when Ben S. Bernanke, Chairman of the Federal Reserve, tried in 2010 to launch a new round of stimulus, Hoenig has reached a defining moment. Again, he voted no, eight times all told in 2010. It was a violation of the Fed’s solidarity, but Hoenig’s common sense and banking experience told him that many sizes Preferance would simply flow into the asset price. On the contrary, as Leonard recounts, Bernanke’s undisciplined experiment, in which he was strongly supported by his professor and successor at the Fed, Janet Yellen, fanned the flames of speculation.
To complete his populist trilogy, along with Hoenig and the irresponsible, Leonard adds Jerome H. Powell, the current chair. In contrast to Hoenig, Powell is a polished upper-class executive. Rather than being an example of hardship, Powell’s is the effortless success story of a man with no qualifications. As Powell gracefully climbed the greasy pole, Hoenig found himself pushed aside.
The Fed’s office politics are captured very well by Leonard, as is the intimidating physical backdrop. The fact that Hoenig is a German miner and has a mural commemorating Weimar hyperinflation in his office is a striking detail. Most striking was Leonard’s entry into Powell’s time at the Carlyle Corporation and his role as a corporate raider, wreaking havoc on America’s leading manufacturing companies and its workforce. surname.
https://www.nytimes.com/2022/02/22/books/review/the-lords-of-easy-money-federal-reserve-christopher-leonard.html How much power does the Federal Reserve have?