The Lords of Easy Money

The Wall Street Journal Best Book of the YearNEW YORK TIMES BESTSELLERThe New York Times bestselling business journalist Christopher Leonard infiltrates one of America's most mysterious institutions-the Federal Reserve-to show how its policies spearheaded by Chairman Jerome Powell over the past ten years have accelerated income inequality and put our country's economic stability at risk.If you asked most people what forces led to today's unprecedented income inequality and financial crashes, no one would say the Federal Reserve. For most of its history, the Fed has enjoyed the fawning adoration of the press. When the economy grew, it was credited to the Fed. When the economy imploded in 2008, the Fed got credit for rescuing us.But the Fed also has a unique power to reshape the American economy for the worse, which it did, fatefully, on November 4, 2010 through a radical intervention called quantitative easing. In just a few short years, the Fed more than quadrupled the money supply with one goal: to encourage banks and other investors to extend more risky debt. Leaders at the Fed knew that they were undertaking a bold experiment that would produce few real jobs, with long-term risks that were hard to measure. But the Fed proceeded anyway...and then found itself trapped. Once it printed all that money, there was no way to withdraw it from circulation. The Fed tried several times, only to see market start to crash, at which point the Fed turned the money spigot back on. That's what it did when COVID hit, printing 300 years' worth of money in two short months.Which brings us to now: Ten years on, the gap between the rich and poor has grown dramatically, stock prices are trading far above what's justified by actual corporate profits, corporate debt in America is at an all-time high, and this debt is being traded by big banks on Wall Street, leaving them vulnerable-just as they were during the mortgage boom. Middle-class wages have barely budged in a decade, and consumers are buried under credit card debt, car loan debt, and student debt.The Lords of Easy Money tells the shocking, riveting tale of how quantitative easing is imperiling the American economy through the story of the one man who tried to warn us. This will be the first inside story of how we really got here-and why we face a frightening future....

Autorentext

Christopher Leonard is a business reporter whose work has appeared in The New York Times, The Wall Street Journal, Fortune, and Bloomberg Businessweek. He is the New York Times bestselling author of The Meat Racket and Kochland, which won the J. Anthony Lukas Work-in-Progress Award.

Klappentext

"The New York Times bestselling business journalist Christopher Leonard infiltrates one of America's most mysterious institutions--the Federal Reserve--to show how its policies over the past ten years have accelerated income inequality and put our country's economic stability at risk"--

Zusammenfassung
The Wall Street Journal Best Book of the Year
NEW YORK TIMES BESTSELLER

The New York Times bestselling business journalist Christopher Leonard infiltrates one of America’s most mysterious institutions—the Federal Reserve—to show how its policies spearheaded by Chairman Jerome Powell over the past ten years have accelerated income inequality and put our country’s economic stability at risk.

If you asked most people what forces led to today’s unprecedented income inequality and financial crashes, no one would say the Federal Reserve. For most of its history, the Fed has enjoyed the fawning adoration of the press. When the economy grew, it was credited to the Fed. When the economy imploded in 2008, the Fed got credit for rescuing us.

But the Fed also has a unique power to reshape the American economy for the worse, which it did, fatefully, on November 4, 2010 through a radical intervention called quantitative easing. In just a few short years, the Fed more than quadrupled the money supply with one goal: to encourage banks and other investors to extend more risky debt. Leaders at the Fed knew that they were undertaking a bold experiment that would produce few real jobs, with long-term risks that were hard to measure. But the Fed proceeded anyway...and then found itself trapped. Once it printed all that money, there was no way to withdraw it from circulation. The Fed tried several times, only to see market start to crash, at which point the Fed turned the money spigot back on. That’s what it did when COVID hit, printing 300 years’ worth of money in two short months.

Which brings us to now: Ten years on, the gap between the rich and poor has grown dramatically, stock prices are trading far above what’s justified by actual corporate profits, corporate debt in America is at an all-time high, and this debt is being traded by big banks on Wall Street, leaving them vulnerable—just as they were during the mortgage boom. Middle-class wages have barely budged in a decade, and consumers are buried under credit card debt, car loan debt, and student debt.

The Lords of Easy Money tells the shocking, riveting tale of how quantitative easing is imperiling the American economy through the story of the one man who tried to warn us. This will be the first inside story of how we really got here—and why we face a frightening future.

Leseprobe
Chapter 1: Going Below Zero

CHAPTER 1 GOING BELOW ZERO

(2010)

Thomas Hoenig woke up early on November 3, 2010, knowing what he had to do that day, and also knowing that he was almost certainly going to fail. He was going to cast a vote, and he was going to vote no. He was going to dissent, and he knew that this dissent would probably define his legacy. Hoenig was trying to stop something: A public policy that he believed could very well turn into a catastrophe. He believed it was his duty to do so. But the wheels were already turning to make this policy a reality, and the wheels were far more powerful than he was. The wheels were powered by the big banks on Wall Street, the stock market, and the leadership of America’s Federal Reserve Bank. Everyone knew that Hoenig was going to lose that day, but he was going to vote no anyway.

HoenigI was sixty-four years old, and he was the president of the Federal Reserve Bank of Kansas City, a position that gave him extraordinary power over America’s economic affairs. He was in Washington that morning because he sat on the Federal Reserve’s powerful policy-making committee, which met every six weeks to effectively determine the value and quantity of American money. Most people in America don’t think very much about money—meaning the actual currency, or that thing we call a dollar. The word dollar is, in fact, just a slang term for American currency, which is actually called a Federal Reserve note. People spend Federal Reserve notes every day (if they’re lucky enough to have them), but they rarely think about the complex, largely invisible system that makes money appear out of thin air. This system is the U.S. Federal Reserve System. The Fed, America’s central bank, is the only institution on Earth that can create U.S. dollars at will.

Because he was a senior official at the Federal Reserve, Thomas Hoenig had to think about money all the time. He thought about it in the same way that a very stressed-out building superintendent might think about plumbing and heating. Hoenig had to think about money as a system to be managed, and to be managed just right. When you ran the system that created money, you had to do your job carefully, with prudence and integrity, or else terrible things might happen. The building might flood or catch on fire.

This is why Hoenig felt so much pressure when he woke up that November morning i…