The Lords of Easy Money: How the Federal Reserve Broke the American Economy
The New York Times bestseller from 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 here, for the first time, is the inside story of how the Fed has reshaped the American economy for the worse. It all started on November 3, 2010, when the Fed began 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 the 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 a few short months.
Which brings us to now: Ten years on, the gap between the rich and poor has grown dramatically, inflation is raging, and the stock market is driven by boom, busts, and bailouts. Middle-class Americans seem stuck in a stage of permanent stagnation, with wage gains wiped out by high prices even as they remain buried under credit card debt, car loan debt, and student debt. Meanwhile, the “too big to fail” banks remain bigger and more powerful than ever while the richest Americans enjoy the gains of a hyper-charged financial system.
The Lords of Easy Money “skillfully” (The Wall Street Journal) tells the “fascinating” (The New York Times) tale of how quantitative easing is imperiling the American economy through the story of the one man who tried to warn us. This is the first inside story of how we really got here—and why our economy rests on such unstable ground.
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 here, for the first time, is the inside story of how the Fed has reshaped the American economy for the worse. It all started on November 3, 2010, when the Fed began 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 the 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 a few short months.
Which brings us to now: Ten years on, the gap between the rich and poor has grown dramatically, inflation is raging, and the stock market is driven by boom, busts, and bailouts. Middle-class Americans seem stuck in a stage of permanent stagnation, with wage gains wiped out by high prices even as they remain buried under credit card debt, car loan debt, and student debt. Meanwhile, the “too big to fail” banks remain bigger and more powerful than ever while the richest Americans enjoy the gains of a hyper-charged financial system.
The Lords of Easy Money “skillfully” (The Wall Street Journal) tells the “fascinating” (The New York Times) tale of how quantitative easing is imperiling the American economy through the story of the one man who tried to warn us. This is the first inside story of how we really got here—and why our economy rests on such unstable ground.
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Community Reviews
I do not understand the economy well but a lot of this made sense to me and was written in an accessible way. He writes his conclusions in such a way to infer that everyone would agree with his conclusions as fact. I'm not sure that is the case. I do believe the underlying problems from 2008 have never been fixed and we keep putting band aids on top of band aids. An alarming take with not a lot of solutions.
This book would be about a 7.5/10. This was well written. LOEM opened a world that I never knew existed. The book provided insight into the technical financial instruments of the fed. However, Leonard does an excellent job of adding humor, antidotes, and character development to really bring the reader into the text. The introduction of characters, and the background into their lives added a lot of value to my learning. This is one book that definitely can be re-read to understand the topics.
LoEM is a 6.5/10 in my book (no pun). As an investigative journalist, Christopher Loenard does possess a unique writing style that moves outside the traditional fact-based-only (dry) narrative approach of other authors. He was able to weave in economic and policy concepts using not just their concepts but characters – Hoenig’s, Powell’s, Felter’s were clever narrative objectives used to draw upon greater topics around groupthink, risk, systemic risk, etc. If I step back it is applause-worthy to be able to stuff nearly 100 years of economic history into such a book.
Biggest strengths were the stories – the initial ‘voting’ segments of the book were intriguing as I dove into the smooth and abrasive nature of how Fed communication is its own tool. Sometimes it not about swinging the ax, but moreso discussing intentions to swing, which to move markets. The Rexnord storyline was brilliant – bringing together Powell and Feltner, two men, one company, but at both sides of the economic spectrum, was very well done. 8/10 on storyline and character development.
I think the biggest weakness of the book was the end, unfortunately. In my opinion, he ended in the way of Michelle Alexander with an ending that did not tie the initial story well. Essentially, he summarized the events of Fed-COVID in a very dry way. I would have preferred to end with a personal story of Feltner (for ie). After all, the subtitle of the book is ‘How the Federal Reserve Broke the American Economy.’ Ending the book with an anecdote on where Feltner is now would have been very much appreciated, proving closure to the story of what happens when the money is ‘too easy.’ 5/10 on the ending.
Overall, very satisfying read. I prefer more art (such as the analogies found in ‘Half Never Told’) but I understand that is a writing style of which is very hard to do. Leonard is strong subject matter expert. And in a good way this book left me with more questions about our economic future than answers, as a book of this subject should because it’s entire purpose (IMO) is to lead the reader to search beyond the book for their own answers. Well done.
Final score: 6.5/10
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