IN 2010 THOMAS Hoenig, then the president of the Federal Reserve Bank of Kansas City and a member of the central bank's Federal Open Market Committee, thought he was seeing history repeat itself.
In the early 1980s, when he was a vice president at the Kansas City Fed overseeing bank examiners, he had a front-row seat to a boom and bust in land and oil asset values, which gutted the Midwest's economy. That painful experience stemmed largely from the Fed's loose money policy in the 1970s, followed by that policy's sudden reversal. Hundreds of banks had loans that depended on soaring asset prices, and hundreds of banks failed. Hoenig was responsible for helping decide which banks would live and which would die. He saw "lives were destroyed in this environment" and "people lost everything." Remembering that experience a few decades later, Hoenig did something the collegial structure of the Federal Open Market Committee was designed to discourage: He dissented.
He began voting against the Fed's ongoing policy of quantitative easing (Q.E.)-that is, the injection of new money into the financial system by purchasing bonds from well-connected "primary dealers" on Wall Street-because he foresaw another ultimately unsupportable rise in asset values along with increasingly risky behavior by privileged market players awash in easy money.
In The Lords of Easy Money, business reporter Christopher Leonard relies on Hoenig's heretical perspective as a narrative spine for his detailed reporting on the Fed's thought and action before, during, and after the 2008 financial crisis.
The Fed's drastic and continuous reactions to that downturn, Leonard's analysis suggests, created an economy that automatically redistributes wealth upward and creates nearly irresistible incentives for foolish choices, as big money chases ways to make more money in a near-zero-interest-rate environment where merely saving means losing.
Bu hikaye Reason magazine dergisinin February 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Reason magazine dergisinin February 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
Libertarianism From the Ground Up
ARGUMENTS FOR LIBERTARIANISM typically take two forms. Some libertarians base their creed on natural rights-the idea that each individual has an inborn right to self-ownership, or freedom from aggression, or whatever-and proceed to argue that only a libertarian political regime is compatible with those rights.
Lawlessness and Liberalism
THE UNITED STATES is notorious both for mass incarceration and for militarized police forces.
Politics Without Journalism
THE 2024 CAMPAIGN WAS A WATERSHED MOMENT FOR THE WAY WE PROCESS PUBLIC AFFAIRS.
EVERY BODY HATES PRICES
BUT THEY HELP US DECIDE BETWEEN BOURBON AND BACONATORS.
The Great American City Upon a Hill Is Always Under Construction
AMERICA'S UTOPIAN DREAMS LEAD TO URBAN EXPERIMENTATION.
Amanda Knox Tells Her Own Story
\"OUR CRIMINAL JUSTICE SYSTEM RELIES UPON OUR OWN IGNORANCE AND THE FACT THAT WE DON'T KNOW WHAT OUR RIGHTS ARE.\"
Trade Policy Amnesia
WHILE HE WAS interviewing for the job, President Joe Biden demonstrated an acute awareness of how tariffs work. It's worrisome that he seems to have forgotten that or, worse, chosen to ignore it-since he's been president.
Civil Liberties Lost Under COVID
WHEN JOE BIDEN was sworn in as president in January 2021, he had good reason to be optimistic about the trajectory of the COVID-19 pandemic.
Bye, Joe
AMERICA'S 46th president is headed out the door. After a single term marked by ambitious plans but modest follow-through, Joe Biden is wrapping up his time in office and somewhat reluctantly shuffling off into the sunset.
Q&A Mark Calabria
IF YOU HAVE a mortgage on your home, the odds are that it's backed by one of two congressionally chartered, government-sponsored enterprises (GSES), Fannie Mae and Freddie Mac.