Limitless: The Federal Reserve Takes on a New Age of Crisis - Hardcover

Smialek, Jeanna

Hardcover

ISBN 10: 0593320239 ISBN 13: 9780593320235

Verlag: Knopf, 2023

Inhaltsangabe

AN NPR BEST BOOK OF THE YEAR • This fascinating deep dive into one of the most powerful and least understood American institutions—the Federal Reserve—is “a riveting narrative...[and] an invaluable guide to the monetary policy debates of the last few years" (Liaquat Ahamed, Pulitzer Prize-winning author of Lords of Finance).

“The best book on the Fed in our time and a model of financial writing.” –Kirkus

The marble halls of the Federal Reserve have always held secrets; for decades the Fed did the utmost to preserve its room to maneuver, operating behind the scenes as much as possible. Yet over the past two decades, this elite world of bankers and economists speaking a language that only monetary experts could understand has been forced to change its ways. Amid rising inequality, weakening global economic prospects, and a pandemic, the central bank has entered into a new era of transparency and activism that has changed its role in modern society in subtle but remarkable ways.

Limitless tells the inside story of this deeply impactful transformation, and what it means for ordinary Americans. Focusing on characters such as the Fed chairman Jerome Powell; the Vice Chair for Supervision Randal Quarles; Vice Chair Lael Brainard; the Minneapolis Fed president Neel Kashkari; and the long-ago Fed Chair Marriner S. Eccles—and driven by the rising tension between Main Street and Wall Street—this is a page-turning account of the modern Fed’s inner workings during a crucial inflection point in history.

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Über die Autorin bzw. den Autor

JEANNA SMIALEK has been the Federal Reserve reporter at The New York Times since April 2019. She has covered economic policy since 2013, including growth data, the Treasury Department, and the European Central Bank. She has written for Bloomberg News and Bloomberg Businessweek, is a regular contributor for MarketPlace radio, Wharton Business Daily, and occasionally contributes to CNN, BBC Radio, C-SPAN, and CBSN. A Pittsburgh native, Smialek splits her time between Washington, D.C., and New York City.

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Chapter 1

The Before Times

“Normal” may vary from time to time.

—Daniel Tarullo, then a Fed governor, December 2014 Federal Open Market Committee meeting transcript

The school gymnasium in East Hartford, Connecticut, did not share much in common with the swanky Washington, D.C., dining establishment that Jerome Powell had frequented before becoming chair of America’s Federal Reserve.

At the Metropolitan Club in D.C., which he had once visited regularly for work lunches, gentlemen were expected to wear ties. Real ones. String ties, ascots, and turtlenecks were “not acceptable,” the bylaws of the members-only institution sniffed. If a gentleman were to make the faux pas of arriving without appropriate neckwear, something fitting would be loaned to him.

At Silver Lane Elementary School, where Powell had traveled on a late November morning in 2019, it was obvious that many of the jacket-wearing attendees had donned them for the chairman’s benefit. Schoolchildren wore purple polo shirts, and at least one person had on blue jeans. The guest list, too, couldn’t have been more different. He had usually held one-on-one meetings at the Club, joining high-ranking government officials—generally white men—for American fare served beneath chandeliers. Nearby diners were often known figures from exclusive backgrounds. Women, banned for the bulk of the club’s 150-year history, remained relatively scarce.

That gray autumn day in Connecticut, a diverse set of manufacturing workers, teachers, and community advocates sat around a horseshoe of cafeteria tables hidden underneath black tablecloths. They spooned Mexican rice and roasted chicken from a local grocery store out of buffet-style aluminum steamers. Powell went back for seconds.

The chair of the Federal Reserve was the son of a D.C. lawyer, had been a private equity power player in his middle age, and was perhaps the mightiest economic policy maker in the world at sixty-six. That he had chosen to forsake Washington’s more sumptuous halls for a squeaky-floored gym, where the waxy scent of crayons lingered in the air and industrial bulbs cast a cold white light on the proceedings, said something important about his priorities at the central bank he was quietly reshaping.

The Fed had ascended to become the nation’s most important economic institution by the early twenty-first century. It guided the economy by setting interest rates, the price of money. It lowered rates to encourage lending and spending when the economy was weak or raised them to slow it down when consumption and hiring were running hot. It was a technocratic job, but an important one with big consequences for the American population. The Fed used its policy to achieve the two main goals Congress had assigned it: keeping inflation low and fostering full employment. Prosperity turned on whether it succeeded.

The Fed’s role in society didn’t stop there. As of 2019, it also regulated and supervised the nation’s largest bank holding companies, monitored financial stability, managed the nation’s cash supply and core payments system, and performed extensive economic research. Its officials often gave lawmakers advice, typically vague and nonpartisan, about the national debt or the importance of an unfolding labor force trend. It was, effectively, the government’s largest economic and financial think tank. It also served as Wall Street’s insurance policy. The central bank had the power to backstop troubled markets in times of extreme stress by lending money and smoothing over trading in hard-to-sell financial assets, a role it had filled most dramatically during the financial crisis that had rocked the world in 2008.

It was a big job, but the Fed was a big institution. It consisted of twelve regional banks scattered across the country and a Board of Governors in Washington, D.C. The regional Fed branches kept commercial banks in their districts supplied with cash, supervised those banks, and employed economic researchers. Regional bank presidents took turns voting on monetary policy—five had a vote at any given time, and one of those was always New York—and held a seat at every policy-setting Fed meeting. The presidents were selected by reserve bank boards, which consisted of local businesspeople and nonprofit representatives, and were confirmed to their posts by Washington-based officials. They typically stayed in their jobs for as long as they wanted, with some serving for decades. The reserve branches were set up like private corporations, though they functioned in the public’s interest.

If the semiprivate regional banks were the Fed’s limbs, the Washington-based board was the beating heart of the system. It was fully public, with its seven governors appointed by the president and confirmed by the Senate. The Fed’s chairperson, vice-chair, and vice-chair for supervision were all governors, and board members had authorities that presidents lacked. They held constant votes on monetary policy, and they alone regulated the nation’s largest banks and voted to create financial rescue programs in times of crisis. They also had very long terms: fourteen years if served from start to finish, though people rarely stayed for full stints. Thanks to how powerful the positions were and how long they could last, the White House typically treated appointments to the Fed Board with gravity, carefully vetting candidates and floating names in the press to make sure they didn’t stir up too much controversy.

Powell had first come to the Fed Board in 2012, when President Barack Obama appointed him as one of its seven governors. He was chosen, funnily enough, partly for his Republican politics. The president’s latest nominee had failed to pass the Senate Banking Committee, his chances tanked by a Republican senator, and the Democratic administration felt it needed to make a bipartisan offering to the Senate to get a candidate confirmed. As Obama officials searched for qualified candidates to appoint to two open Fed seats, they landed on Jeremy Stein, a financial regulation expert and Harvard University academic who would bring needed expertise to the Board. Other economists insisted that Stein was a Republican, but when it turned out that he was actually a registered Democrat, the administration decided it wanted him anyway. Officials briefly contemplated pairing Stein with Richard Clarida, a genuine Republican who was a professor at Columbia and adviser at the asset-management behemoth Pacific Investment Management Company, or Pimco. Clarida, unfortunately for them, decided that he didn’t want to leave his job. They homed in on Powell.

The lawyer and financier had cut a low profile in the Washington policy scene until then, but he was an attractive pick for the political horse trade. He was a moderate Republican, and he was working at a think tank called the Bipartisan Policy Center when the administration came calling, earning $1 per year for his efforts, something unheard of at the institution. He had wanted to get a toehold in the Washington policy discussion, and he had already made tens of millions of dollars in his private-sector career. The debt ceiling crisis of 2011 had given him a major project. That year, Congressional conservatives threatened not to raise the nation’s borrowing limit, which would have prevented the country from continuing to pay its bills. As a former Treasury official and a clear public speaker, Powell had been able to wage a sober informational campaign detailing exactly when the debt limit would be breached and what that would mean.

Powell had compiled spreadsheets that allowed him to guess the “X Date” when the government would no longer be able to make...

Details zur Ausgabe

• Verlag: Knopf
• Erscheinungsdatum: 2023
• Sprache: Englisch
• ISBN 10: 0593320239
• ISBN 13: 9780593320235
• Einband: Gebundene Ausgabe
• Anzahl der Seiten: 384
• Kontakt zum Hersteller: Knopf; https://knopfdoubleday.com; ; 3 Queen Caroline Street Hammersmith; London; W6 9PE; Vereinigtes Königreich
• Verantwortliche Person: preigu; mail@preigu.de; ; Lengericher Landstr. 19; Osnabrück; 49078; Deutschland