The Lords of Easy Money: How the Federal Reserve Broke the American Economy by Christopher Leonard

The Lords of Easy Money: How the Federal Reserve Broke the American Economy Reviews

• 
  Todd

  Book covers the Fed's actions after the 2008 Great Recession. Basic message is it has pumped trillions of dollars of cash (through quantitative easing and other tools) into the financial system creating both pricing inflation and asset inflation. It's unlikely this is sustainable, and we are in for an asset bubble crash and high pricing inflation. Problem with this is there is no good end game other than lots of misery. When you think about it from the standpoint you can only create dollars if there are really additional goods and services behind the added dollars, it's pretty easy to see this is problem. We've added all these dollars through pressing a mouse click at the Fed and the GDP has not really gone up. I'm hoping people will read this and understand the power of the Fed and continue to push for transparency there. I'm also hoping people with compel their legislators to not force the Fed to fix the economy alone but actually provide legislation through taxes and incentives that give us a sustainable economy. The lack of any real economic legislation (other than the pandemic stimulus packages) was another shortcoming the book pointed out. I guess my only critique of the book would be that it really didn't highlight what one should do with their money given the framework we're in now. I think that would have helped those who read the book to navigate the coming years.
• 
  PWB

  Let's start off on the positive side the background information on Hoenig and Powell is very interesting and well written. Former KC Fed President Hoenig was the one voting against much of the balance sheet expansionary policies during Bernanke's term and provides the main thesis of the book which is that balance sheet expansion lead to asset bubbles, which helps the top 1% and hurts everyone who doesn't own assets. This is a fairly accepted view in the mainstream and the author does a good job building this argument.
  
  Unfortunately if you are looking to expand your finance knowledge, this book has some serious drawbacks, including many items that any good editor would have caught. The most blatant one, and one that had me cringe every time he wrote this, was not understanding what a 'Treasury Bill' is. T Bills are short term debt instruments, issued by the Treasury at a discount, that do not have a coupon and mature under a year. Treasury Notes and Bonds are longer maturities and have coupons. This is easily verified by a quick google search. Throughout the book the author consistently confuses the two in fact, he goes so far as to put in a glossary of terms including the incorrect definition of a T Bill. It is as if no one who knew anything about fixed income read this book. The author also goes into depth about the repo spike in September 2019 as an expert. He makes some serious mistakes about the rates of repo being purely a function of the credit risk of the counterparty, not the market price of borrowing. This, unlike the T Bill snafu, is a very complicated issue but the author showed his lack of understanding by making some big mistakes. The author shows his bias against hedge funds when discussing Treasury basis trades, when not understanding that banks are just as big in that trade. There is another mistake where the author said after QE the Fed was selling bonds, but they were rolling them off; this is a subtle distinction, but fairly large in the market context. There was a time before they sold, but not in the time he mentioned.
  
  When the author is giving background information on member of the Fed, the writing is great. When he tries to explain financial terms or transactions, he gets out of his comfort zone and for those who are experts, it's very frustrating to read and is riddled with mistakes. It's a quick read, and I agree with the thesis, but it could have been just a long magazine article instead.
• 
  Chris Waldorf

  This book tells a highly engaging story of how the role of the Federal Reserve has morphed over the past fifty years and how this change has inflated stock prices and also introduced significant risks. I know you might be thinking, 'How can this topic be interesting?'. Amazingly the author has made it so with a great combination of storytelling and clear explanation of the forces at play.
• 
  Michael Wilson

  The benefits of ZIRP (a funny term since currently that means rates set 5% below inflation) and QE have gone mainly to the rich investing class. These tools were used to 'cure' the implosion of the 2008 debt bubble via creating an even risky unstable leveraged bubble that is even dependent upon Fed interventions. Corporate debt has exploded. US debt has exploded. Housing prices and stock market prices have soared. The problems that created the 2008 crisis were never fixed they have only been amplified.
  
  The book ends with the words, 'The bills have yet to be paid.' Prophetic since we are now experiencing extreme amounts of inflation because the bills are coming due. How does the Fed fight inflation and at the same time keep the 'shadow banking' system from imploding, as it started to do in 2019, after the Fed raised rates a smidgen?
• 
  George Jardine

  If only 1/4 of this book is true and from all my research, it is then as a country we're in deep trouble. Leonard shows his strength as a true old school journalist, painting a detailed and well researched picture. It's a deftly told story of a Federal Reserve and its players, who have painted themselves into a dangerous corner. Along the way, in the clearest possible language, Leonard educates us about how the Fed targets and supports short term interest rates, how QE works, and how the unintended consequences of those actions manifest themselves. Best of all, he does so without picking sides, or blaming so called liberals or conservatives for our economic problems. As I said, a true journalistic exploration, told from ground zero of the banker's POV, as well as the effect on the working person's day to day experience.
• 
  jonalong

  On my 'must read' list. The book explores the interplay between The Federal Reserve’s economic policy, Congressional fiscal policy, the rising globalization of markets and their effect on the U.S. economy. It does so in an understandable fashion avoiding the
  'Fed speak' so often used in government and finance to avoid clarity and transparency.
• 
  Dominic Taylor

  An insightful book severely compromised by Mr Leonard's frequent digressions into Trump hating, perpetuating the discredited official Coronavirus narrative and election fraud denial, none of which are really relevant to the subject at hand. Presumably he wants to appease his patrons at The New York Times and Washington Post.
• 
  Andrew Ballard

  Leonard does a decent job in describing the decisions the Fed made in the free money era. I'm a professional investor, I lived through all these activities, but I still learned something.
  
  I'd prefer fewer anecdotes, hard data, but that's not really the point of the book.
• 
  Jim Merrill

  KINDLE SUCKS