The Alchemists: Inside the secret world of central bankers

by Neil Irwin

When the first rumblings of the coming financial crisis were heard in august 2007, three men who were never elected to public office suddenly became the most powerful men in the world. They were the leaders of the world's three most important central ben bernanke of the u. S. Federal reserve, mervyn king of the bank of england, and jean-claude trichet of the european central bank. Over the next five years, they and their fellow central bankers deployed trillions of dollars, pounds and euros to try and contain the waves of panic that threatened to bring down the global financial system. Neil irwin's the alchemists is both a gripping account of the most intense exercise in economic crisis management we've ever seen, and an insightful examination of the role and power of the central bank. It begins in stockholm, sweden, in the seventeenth century, where central banking had its rocky birth, and then progresses through a brisk but dazzling tutorial on how the central banker came to e

Genres: Economics, Finance, History, Nonfiction, Business, Politics, Biography

544 pages, Paperback

First published April 4, 2013

Reviews

[Aaron Arnold · Rating 4 out of 5]

This is the history of the Great Recession as told through the eyes of its central bankers, which is a particular angle I hadn't seen before. Inevitably, it will disappoint in certain ways: in much the same way that The Best and the Brightest, David Halberstam's magisterial account of the political factors that drove the decisions to escalate the Vietnam War, was not intended to be a military strategy guide, this work of journalism is not intended to be an economic policy primer. For that, you need something like Paul Krugman's The Return of Depression Economics or a Dean Baker work like Getting Back to Full Employment. However, if you're curious about who ran the world's central banks during the early stages of the crisis and why they made the decisions they did, then this book has much to recommend it, even if it will make you angry.

First things first: Irwin didn't get to talk to Bernanke, King, or Trichet, he relied on the usual "close and confidential sources", so we get coverage that's an extended version of the stuff he writes at his day job as an economics reporter for the Washington Post. That's fine with me - I like his work there and find it valuable reading, and I would hardly expect the Fed chair to start spilling insider gossip. The interest for me in this book is in reading the structural factors behind the policy response to the 2007 financial crisis and its increasingly unbelievably long aftermath, because while each central bank was set up seemingly similarly, with unelected, nearly unaccountable "technocrats" in theory free to direct their respective economies without political interference from the rabble, each were constrained in consequential ways. I'm reminded once again, as I am every time I read anything trying to justify why central banks are so insulated from the outside world, of Isaac Asimov's Foundation series, and how the central banker-ish Second Foundation could do their jobs of steering the fate of the galaxy properly only if no one knew they existed or what they were doing. That didn't turn out so well in the series and hasn't turned out so well lately in the real world.

Quite frankly, what he reveals is depressing, although not too surprising. An entire human lifespan after the Great Depression, large numbers of policymakers have never bothered to read anything Keynes (or even Friedman, it seems) wrote about it, and so as banks were failing and credit drying up across the planet, each of the three leaders had to contend with coworkers and politicians determined to replicate their grandfathers' mistakes. The behavior of the inflation-obsessed German contingent in the European Central Bank, for example, inescapably brings to mind that Talleyrand quote about the Bourbon Dynasty that they "had learned nothing and forgotten nothing", constantly conjuring specters of the Weimar inflation while never referring to the Depression deflation that actually brought fascism to power. Likewise, the "inflation hawk" faction of Federal Reserve Governors reminds me of Republican Party operatives (both present-day and in the 1930s, come to think of it), almost ghoulishly eager to, in the hapless Hooverist words of former Treasury Secretary Andrew Mellon, "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people." In the UK, Mervyn King himself comes off terribly with his contentious management style and almost open campaigning for the Conservative Party before their 2010 elections.

Irwin's profiles reveal a surprisingly confused central banking system, confused enough to make one rethink the extraordinary amount of deference and latitude they're currently provided. The ECB, for example, keeps transcripts of its decision-making secret for an astonishing 30 years! If voters could see how confused, contradictory, dilatory, and just plain inept their planning sessions were, perhaps the incredible spectacle of them openly or covertly toppling one elected government after another would be revealed for the travesty that it is. These guys constantly mention how dedicated they are to preserving the dividing line between the "pure" monetary policy of bond purchases or liquidity provision and the "political" fiscal policy of taxation and spending practices, yet by the end of the book in mid-2013, the only leader left standing from before the crisis is Angela Merkel, whose German constituents have coincidentally been about the only ones well-served by the ECB's painfully tight monetary policies. These bankers are not really technocrats at all; that moralizing language that Mellon was using back in the 30s gets tossed around all the time towards "irresponsible" nations like Ireland or Portugal, whose helpless governments collapse and whose young people get condemned to a generation of diminished life expectations because some unelected banker who never met an interest rate hike he didn't like refuses to allow even the possibility of an economic recovery.

One interesting detail is that the Federal Reserve often tends to present its policy choices internally in threes: a "hawkish" policy that aggressively targets inflation; a "dovish" policy that focuses more on unemployment; and a "Goldilocks" policy that effectively splits the difference. This is the Overton window at work, and it says a lot that even a guy like Bernanke, who supposedly spent a great deal of his academic time studying the Great Depression and Lost Decade-era Japan (whose unfortunate central banker Masaru Hayami gets a brief section of woe), only managed to do what at best can be described as an "adequate" job with respect to inflation and a downright awful job with respect to unemployment. Part of that isn't necessarily his fault - like I said, his cohorts are often clueless, and the gold standard fetishists/budget arsonists in the Republican Party are simply malignant - but it makes one question the wisdom of trying to cleanly separate monetary policy from social feedback. I'm not saying I have a better idea for how to run the global macroeconomy, but I would love to see some sort of accountability for the members of these central banks whose supposedly nonpartisan, technocratic expertise put us in such a mess. The later section on People's Bank of China head Zhou Xiaochuan and his relative lack of autonomy doesn't necessarily sound so bad, but you've got to be careful about importing any part of China's governance model. Maybe you could head off problems in the candidate stage and force every prospective central banker to play a Great Depression simulator game (SimFed?), with anyone who starts talking about hyperinflation getting instantly DQed? As Irwin ably shows, macroeconomics is still depressingly full of "zombie ideas", in John Quiggin's phrase, which I guess is why this book isn't entitled "The Scientists". Prepare to be alternately informed and outraged.

[Hana · Rating 3 out of 5]

A useful and surprisingly readable overview of how U.S., European and British central banking authorities responded to the credit crisis of 2007-2008 and its aftermath. The Alchemists assumes some basic knowledge of how central banking works but it is still quite accessible for the non-specialist. There are inevitable gaps in the narrative and I've listed some additional resources in the comments section for those longing to delve deeper.



The Alchemists is framed as the personal story of three rather cute central bankers in the middle of a global crisis. I know they are cute since the book is lavishly illustrated with many, many photos of said bankers (see above for one example). On a scale of one to ten on central banker cuteness these guys win hands down (I'm giving top votes to Bernanke--love the beard). Mervyn King head of the Bank of England, Ben Bernanke of the U.S. Federal Reserve, and Jean-Claude Trichet of the European Central Bank played key roles during the credit crisis of 2007-2008 and in the severe global recession that followed (Parts II through IV of The Alchemists). While mistakes were made, on balance the world is very fortunate that these three men were at the helm when the crisis hit.

Truthfully, I think the book would have been improved with fewer pictures of bankers and more diagrams of how central banks work or how a mortgage-backed security is structured.

Prior to tackling the credit crisis, Neil Irwin takes us on a whirlwind historical tour of central banking, starting with Europe's first experiment with paper money in Sweden in 1657 when King Karl X Gustav granted a charter to Johan Palmstruch to create a bank that would provide paper letters of credit backed by the copper daler plates that were the country's awkward medium of exchange. Here's a Stockholms Banco letter of credit:



The story of central banking's greatest failure--the 1929 crash and its Great Depression aftermath--is told in a few brief, but illuminating pages.

In another fascinating chapter, Irwin describes the policy errors and external factors that led to runaway inflation in the U.S. and details Federal Reserve Chairman Paul Volker's deeply unpopular, but ultimately successful efforts to bring hyper-inflation under control. Volcker, U.S. Federal Reserve chairman from 1976-1987, rates pretty close to a ten on my courageous central banker scale, but gets marks off on the cuteness scale for the cigar:



I found the chapters on how and why the Euro was adopted particularly useful--as was the analysis of the Eurozone's response to the crisis and its aftermath. I'm still a Euro-sceptic, but I found myself rather in awe of how well Trichet and his successor, Mario Draghi, have managed their nearly impossible task.

Buddy Read with Carolien for Mid-September 2014

[Arun Divakar · Rating 3 out of 5]

The subject of economics is one which I have steered clear from in my readings. The reason behind this was that I could not find it to be one that called out to my curiosity . Reflecting on it slightly more made me understand that this could be an aftermath of my education too wherein unless you have a passion for them subjects like mathematics, economics and physics can become rather dry and soporific. Picking up this book was a conscious decision whereby I wanted to shed some of these notions and get to know the real world import of economics. The attempt was met with moderate success and my understanding of some aspects of global finance have increased but then not so much. The book is a good primer and written mostly in layman's language.

The premise of the book is the factors and circumstances that led up to the global financial recession of 2007-08, it's impact, crisis handling, aftermath and continuing echoes. Three men - Mervyn King, Ben Bernanke and Jean-Claude Trichet navigate the western financial markets through these throes by a method of trial and error and thereby mold history in the process. The first two parts of the book are about some of the factors of global import -creation of the Euro, Greece going bankrupt, the bursting of the mortgage bubble in the US , bankruptcy of the Lehman Brothers, etc and the later chapters are a series of decisions which changed the way how the global economy functions. As I mentioned at the onset, I did not understand all of the goings on here but then a 75% grasp of them was good enough for a novice like me.

Recommended !

[Jason Hebert · Rating 5 out of 5]

This book was a fascinating look at our recent recession and the fiscal remedies employed. Anyone with an interest in understanding the world's banking systems, and the challenges they currently face, should read this book. Considering the current importance of those systems, that means I would recommend it to everyone.

[Pablo Mejia · Rating 4 out of 5]

Una bitácora detallada del rol de los banqueros centrales durante los hechos ocurridos entre 2007 y 2013 en lo que fueron las crisis de deuda más importante de nuestra tiempo (antes de lo que pueda ocurrir hacia adelante por las deudas incurridas por los países en el COVID19 a nivel global).

Con ese contexto, es muy detallado sobre los hechos politicos e institucionales en el escalamiento de medidas económicas poco ortodoxas como las tasas al 0%, la expansión monetaria (QE) y la consolidación de los balances de estos bancos con instrumentos financieros de riesgo moderado.

Una mirada cercana a la personalidad y estilos de liderazgo de Ben Bernanke (FED), Mervin King (BoE) y Jean Claude Trichet (ECB) y en menor medida, una mirada a los banqueros de Japón y China. Una narración llena de datos históricos curiosos como la emisión de los primeros billetes por el Banco Sueco, frases celebres de Volvker o un contexto de la "Larga Depresión" de 1870 que antecedió la "Gran Depresión" de 1930 con un marco de respuesta mucho más acertado.

En resumen, un libro imperdible para aquellos interesados en entender la historia económica y profundizar en como los ciclos económicos se convierten también en ciclos políticos.

[Adithya Jain · Rating 5 out of 5]

In this brilliant book on Central Banking, Neil Irwin makes the impact these relatively silent institutions have had on our lives. Virtually controlling the economy and money supply, a solid central bank has existed at the center of every empire that has ruled the modern world.

Though it is a book that deals with fundamentals of economics, the language makes it easily accessible to any layman. The author delves deeply into the history of Central Banking and reminds us of the impact that this has had in our lives. From the establishment of the first Central Bank in Sweden, to the crisis of Reichsbank, and through the contentious history of Central Banking in the United States, the history of Central Banking is far from a straight line.

Apart from history, the book deals with two primary crises that have shaken the modern financial system of late: The 2008 Global Recession and the Eurozone Crisis. The way the Federal Reserve and the ECB fought these crises make for an interesting read.

The book mainly focuses only on the major central banks of the world: the Fed, ECB and the Bank of England. There are sneak peaks available into the functioning of the People's Bank of China and the Japanese Central Bank as well.

Altogether the book gives a good introduction into the world of Central Banking. It might not be the ideal book for a complete layman or an academic, as both of them would find it a tone heavier and lighter respectively than desired.

[Carolien · Rating 3 out of 5]

Buddy read with Hana, Sep 2014

No portraits of Palmstrch or descriptions of his personal manner have survived. But it seems fair to assume that he was a smooth talker. But it seems fair to assume that he was a smooth talker. He must have conveyed seriousness, probity, and wisdom and been able to make people trust him without a second of doubt. This description of the world's first central banker bears an uncanny resemblance to Moist Von Lipwig, Terry Pratchett's central banker in Making Money.

This book provides a useful insight in the roles played by the various central banks during the 2008 financial crisis. It is particularly useful in its analysis of the European and British central banks. It presuppose a lot of background knowledge by the reader on the events that occurred in especially the United States during the crisis. The final chapter on the People's Bank of China definitely adds to the usefulness of the book.

[James Watson · Rating 5 out of 5]

An inside look at the happenings of the three most important central banks in the world preceding, during, and following the 2008 financial crisis. I learnt more about monetary policy, the politics of economic decisions, and the relationships between nations in times of crises than any textbook. A must read if looking to understand how decisions are made during times of panic.

[Breakingviews · Rating 4 out of 5]

By Dominic Elliott

The most lasting inheritance of the 2008 financial crisis may be a change in the purpose of central banks. From the 1980s until 2007, most believed that monetary authorities should primarily use a policy interest rate to combat inflation. Interventions in the markets or in the financial system were outside the remit, or so the orthodox view went. Neil Irwin’s “The Alchemists” shows how that thinking has been turned on its head.

Central banks now have vast power. The European Central Bank, led by Jean-Claude Trichet, flouted the spirit of the Maastricht Treaty by buying bonds of euro zone states; Mervyn King’s independent Bank of England became part of the political debate as it engaged in monetary easing on a vast scale; and Ben Bernanke’s Federal Reserve has experimented with even more radical and creative ways to fix the U.S. economy. Irwin, a Washington Post journalist, underscores just how revolutionary those moves were.

The book breezes through central banking’s troubled history, starting with the first central banker, Johan Palmstruch, a jailed debtor who assumed a new identity. He plunged Sweden into an economic depression and died a much-reviled man. Reichsbank President Rudolf van Haverstein’s unfortunate penchant for monetising German debt during World War One was another low point.

Irwin really provides spice, however, with a blow-by-blow account of the financial crisis and its aftermath. There’s a fine level of detail: Mervyn King dog-sledding at a central bankers’ convention in the remote Canadian territory of Iqaluit, for example. Central banking seems sexy after all, even if the claim that French President Nicolas Sarkozy’s walk at Deauville with German Chancellor Angela Merkel was the “most consequential stroll on a beach in history” is exaggerated.

Still, it’s an achievement to produce a page-turner that also explains the various ideologies of central banking. In essence, central banking has been a game of trial and error. And the seat-of-the-pants decision-making in the euro zone involved many strange manoeuvres. Bundesbank head Axel Weber reneged on his support of Trichet’s bond-buying plan, placing the euro zone in even greater peril. Meanwhile, Dominique Strauss-Kahn, head of the International Monetary Fund, was promising bailout money before he was authorised to do so.

Of the book’s three main protagonists - Trichet, Bernanke and King - only the U.S. Fed chairman comes out remotely well. His openness to new ideas is contrasted with King’s stubbornness and Trichet’s self-importance.

The author could have done more to consider the negative effects of flooding the global economy with cheap money. The concept of eurobonds - an important possible way to fix European finance - is also dismissed without comment. But China’s lack of central banking independence is highlighted as an important counterweight to the Western approach: the government’s authoritarian control of monetary policy helped the Chinese economy snap back with barely a blip post-crisis.

Irwin has produced a book that is highly readable and a riposte to Robert Pringle’s “The Money Trap”, which argues that the financial system is dangerously fragmented. For Irwin, the crisis has pushed central bankers to find solutions in concert. The alchemists may not have produced gold, but they provided enough monetary glue to hold societies together.

[J · Rating 3 out of 5]

I recommend this book to anyone who is interested in monetary policy or international economics. As far as books on the financial crisis go, there are probably better ones out there, but this book’s strength is in bringing to life the human drama behind the staid world of central banking. Written by a financial journalist who witnessed the crises first-hand, it is full of colorful behind-the-scenes anecdotes and revelations about the personalities of the central bankers. For example, quantitative easing was first implemented by the Governor of the Bank of Japan as a way to save face and reverse a bad decision he made on interest rates a few months before! My understating of macroeconomic theory was definitely strengthened by seeing it put into practice, so I got a lot of educational value out of this book.

The first part of the book is a fascinating history of central banking. Next, Irwin goes through the 2008 financial crisis. I had heard the story various times before, such as in Too Big To Fail, but it was interesting to hear it from the Federal Reserve’s perspective. Part 3 goes into the aftermath and political blowback of 2008. While Ben Bernanke may well have saved the United States and the world from an economic meltdown, he spent the next period fighting for the very existence of the Federal Reserve! You may feel a sense of range boiling up in you during this section at the idiocy of Congress. The next part deals with the Euro crisis, and I felt that here the book lost some of its narrative momentum. That could simply be a reflection of the fact the Euro crisis itself dragged on interminably, with little decisive action. There was a final chapter on the Bank of China that seemed tacked on at the end - that could have been an appendix, or an epilogue on potential future crises.

[Tim · Rating 5 out of 5]

Phenomenal book reviewing the 2008 Banking crises from a new perspective - the international one. I have read a lot about this topic and was pleased to get a new approach. Irwin dives into how the history of Fed, the Bank of England and the ECB and how they are structured and how that influences their actions. It also explains how they are able to co-ordinate their influence.
Great book for economists.

[Matt Nolan · Rating 4 out of 5]

Good book. However, it appears to underplay the "currency risk" associated with the Euro - a key factor that led to the crisis heading on another downward leg from mid-2012. An update version with a couple of additional chapters given more recent events is likely to appear at somepoint, and that will be worth 5-stars.

[K C · Rating 2 out of 5]

Journalist's account of the "history" of central banking, but most of it is about the last 6 years. Entertainingly written for what it is, but despite it's title there are no secret revelations to anyone who follows the financial press. Adamed's "The Lords of Finance" is better for understanding central banking, and Blinder's "After the Music Stops" is better for the 2007-13 financial crisis.

[Kalpak Shah · Rating 5 out of 5]

Wonderful book to understand the origins and inner workings of central banks. Must read if you have interest in global finance, macroeconomics and politics.

[André Morais · Rating 4 out of 5]

Irwin’s “The Alchemists” resorts to the well-known alchemy metaphor, pursuing Keynes’ description of Newton, which is very well targeted in the case of Bernanke, King and Trichet (with different measures) and their expansionary policies, which took central banks’ balances to a whole other level, never seen before.
The most interesting part of the book is how well it mixes theory and policy discussion with a reporting account of the most small detail. In particular, I enjoyed very much the explanation of the QE implementation by the New York Fed with a description of the functioning of their Markets room and their reverse auctions.
The initial part, although not novel, presents an important albeit short, historical account of central banking. I enjoyed it.
However, two things appeared clear to me and make me thing that Irwin’s book is quite apologetic to the QE policy undertook by these central banking characters: no word is reserved to inequality and how these expansionary policies allowed for inflationary pressures to set-in, thus permanently excluding the have-nots, mainly youngsters, from the possibility of, for instance, ever having a house, kind of freezing the wealth of the well-settled.
Furthermore, the independence of central banking is acritically accepted as sacrosanct and it should be questioned, in light of the invasion of the democratic sphere undertook by CBs during the Great Crisis (which is lightly referred to by Irwin throughout the book). The last paragraph is particularly vivid: “Democratic societies entrust central bankers with vast power because some things are so important yet so technically complex that we can’t really put them to a vote” (p. 463). Really? Is there really something out of democracy because it is out of general comprehension? This is a very dangerous line of reasoning.

[Mitzi · Rating 4 out of 5]

This book may be a little dated now, but it is still a great introduction to size, scope, and function of central banks and bankers. I am embarrassingly ignorant of all these things so for me it was enlightening and educational. Irwin starts with the first central bank in Sweden in the 1660s and outlines the basic history and roles of central banks in everything from the Great Depression to the inflation of the Nixon years. Most of the book focuses on the years from 2007-2012, during the bank bailouts, Greece's struggle, and the subsequent actions to normalize the economies since. I realize how entangled all the economies in the world are, and sometimes felt like it is good and right that these technocrats can figure out what needs to happen to keep the economies at an even keel. Other times I was amazed (and a little horrified) to realize how much power these few men hold. Holding the purse strings carries a lot of power--and the wrong decisions can cause economic disaster, depressions, war. Irwin definitely sides with the bankers, his portrayal shows them making the best decision they could at the time, and entrusts that they will learn by their mistakes. He points out that despite criticism, these three men (Berneke, King, and Trichet), averted the worst pitfalls of what could have happened. Although the book ends 10 years ago, (it was published in 2013), I still feel like I learned a lot and can understand the Fed's role and the different strategies it uses.

[Fancynancy · Rating 3 out of 5]

When the bookstore didn't have the book I wanted, I chose this and I think it was a mistake. The book is well-written by an excellent journalist, but I had just finished Other People's Money by John Kay, which is a far more rigorous analysis of the finacialization of the global economy by an economics professor. The Alchemists is a lot like so many other books out there on this same topic. Other People's Money digs much deeper into the causes of our economy today and doesn't necessarily agree with all the other books which have been written on this topic. If you just need to read about the basic facts of what happened in 2007-2008 and you want a little color to your reading, then choose The Alchemists. But, in my opinion, if you really want to know what's going on in the global economy, choose Other People's Money. Also, if you want to know a lot more than what happened in the U.S., Britain and France, Other People's Money will explain more about how countries like Germany, Ireland, Japan and so forth came to be how they are and the explanations make a lot more sense. In fact, the entire global economy will come to make a lot more sense. This book reports on what the journalist perceived as the facts at the time and after. Other People's Money explains how those facts came to be. It is far more intellectually stimulating and satisfying.

[Kate · Rating 3 out of 5]

When I started reading this book, I knew nothing real about the Fed other than it had "bailed out Wall Street". Why did it do that? Did it really hurt the American people with it's interventions in 2008 and beyond? Why did the US crisis affect Europe? Why was everyone talking about a crisis in the Eurozone?

I can't say at the completion of listening to this audiobook that I can reasonably explain a coherent multi-sentence answer to any of the above questions. Maybe if I'd listened more closely, taken more notes.. That's not to say this book was overly academic or inaccessible. On the contrary, Irwin's writing often translated impossible central bank-speak into something comprehensible.

Whether or not it was a balanced account, I can't say. But it definitely felt like a thorough one. Would recommend for anyone trying to better understand "WTF happened in the financial crisis?"

On whether or not it is a balanced account, the NY Times suggests it is: https://www.nytimes.com/2013/05/05/bu...

[Lavinia · Rating 4 out of 5]

Having taken much much longer to read this book than anticipated, I think I've established that I strongly prefer to consume economic news in articles. Alas, most retrospectives tend toward the superficial and excessively narrative. This book manages to stage the events of the 2008 financial crisis with the lights of an epic drama without using too heavy a filter, but it still has too many words. And for all those words, it's remarkably light on the Asian market reaction, though I appreciate the in-depth explanation of central banking mechanisms and culture. It's a fortunate choice of subject in that central banking is a field that could remotely be said to have a cast of characters, so its descriptions of individuals and events is actually relevant. I feel I have a sense of what all these people are alike, and on top of that the schedule of proper nouns will certainly inform my future Bloomberg reading.

[Tim McLynn · Rating 4 out of 5]

A touch more technical than my last couple of reads, Neil Irwin's The Alchemists tells the story of our most recent global financial crisis through accounts from behind-the-scenes of central banks as head bankers Bernanke (US), Trichet (EU) and King (UK) were forced to make unprecedented decision after unprecedented decision to keep the economy from falling further into recession. Irwin’s anachronic telling adds to the complexity involved in keeping track of each central bank’s different policies. However, it aids in explaining the necessity of bankers working in unison, as one nation’s problems always seemed to intensify the problems of others. The central bankers showed strong camaraderie and pushed through the crisis together, at least publicly. Throughout the 400-page account, Irwin provides a clear rendering of the uncertainty, debate and fear that filled central banks after different events violently swung economies. Ultimately, they were forced to make decisions that would forever change the role that central banking played in global stability.

By starting with a history of central banks, Irwin explains how these technocratic, non-elected central bankers, over the course of hundreds of economic cycles, were able to amass powers that are now only rivaled by country leaders. Central bankers, Irwin offers, are able to do what alchemists could not: create gold from thin air. They can create wealth from just a few paper notes and governmental agreement. With the economy in turmoil, Bernanke, Trichet and King, the book’s main characters used these granted powers (and more), under the notion of stabilizing the economy, to inject hundreds of billions of dollars into the stagnant economy.

Bernanke, Trichet and King developed a tight-knit bond as members of a very small group of technocrats chosen to have unique, unchecked powers in order to perform the monumental task of ensuring economic stability. Bankers realized early on in the crisis that in order to calm markets they needed to act swiftly and together, despite having different motivations and understandings. The need for immediate, unified action to stabilize historically volatile markets demanded many long nights and quick, secretive meetings and unorthodox and untested decisions that swept billions of dollars into or away from capital markets. The global chaos caused an extreme sensitivity in the markets making the bankers’ jobs exponentially trickier. Not only did they need to make these unprecedented decisions unanimously but also they had to make them without showing a hint of wavering to keep markets from collapsing. They often debated for hours just over the lingo and phrasing of each public message.

During the crisis, central bankers controversially compromised their independence by expanding their role and vouching for certain fiscal policies and government programs – including bailouts for certain companies and austerity requirements for certain countries. Besides from the global recession itself, the antagonists of the book were the countries' legislative parties who fought to limit the central banking powers. For the central banks' part, they claimed the fiscal recommendations were necessary to maintain their goal of keeping the economy from collapsing completely. The success of these choices continue to be debated today.

As a result of these new policies, bankers were able to push immeasurable amounts of currency into the market in several different ways on several different occasions. Irwin, throughout the book, gives excellent insight on the bankers’ perspective and thinking as the crisis evolved. He provides background for the decisions that were made over those five years as the public’s patience waned and options were limited. We see how they internally debated the need to stay independent with the need to stabilizing failing economies. The need to keep tight inflation versus increasing money supply. His stories bring us into the countless conferences, private meetings and phone calls as central bankers made decisions that would affect the world's population. The magnitude of the decisions and the stress they inflicted upon the bankers is apparent. While seemingly undeterred and sure in public, Irwin’s stories from behind closed doors show a much more fragile, hesitant crew of central bankers unsure if their years of research taught them the correct response to this meltdown.

Similar to alchemists, Irwin opines at the beginning, central bankers are seen as part of a shady cabal of scientists concocting secret plans. I believe Irwin does well to uncover this secret, by detailing the emotions of some of world’s most powerful men when they were at their most vulnerable. Irwin’s excellent insight and clear explanation of enacted policies gave me a brand new appreciation for central bankers and their ability to stay calm and make decisions in the midst of a prolonged global bank run. They showed togetherness in an era where political partisanship has caused a standstill in legislation. They showed creativity in a field that had previously only stuck to its known tools. It has been two years since this book came out and we are just now out coming out of the woods. It was not a perfect job by any means but Irwin focuses on what was avoided: “As ugly as the global economy looked five years after the onset of crisis, no war had broken out among the great global powers. Europe remained united. There had been no confidence-shattering hyperinflation or, outside of perhaps Greece and Spain, economic depression. None of this was a certainty.” However, it may take time before we see the true consequences of these decisions made in chaos.

[Michael Baranowski · Rating 2 out of 5]

This account of how the Fed's Ben Bernanke, Mervyn King of the Bank of England, and Jean-Claude Trichet of the European Central Bank was highly praised, and I can see why - Irwin is a great writer and it's a compelling story. But as someone who's never been a big fan of personality-based analysis of politics, it left me frustrated. I don't much care about the tick-tock, behind-the-scenes sort of thing and would prefer a more thoughtful and less personality-driven story that focuses on policy. But that's not a dig at Irwin - a lot more people like the sort of thing he does than appreciate what I'd prefer, and it seems unfair to criticize him because the book he wrote isn't the book I wanted to read.

[Soph Nova · Rating 4 out of 5]

Although I disagree pretty strongly with the heroizing presentation of the central bankers driving the narrative of this story, and the subsequent political implications of framing the 2007-12 financial crisis that way, I still found this book to be a gripping and highly informative read.

“In eight closed-door meetings over the course of that year—the transcripts take up nearly eleven hundred pages—there wasn’t a single mention of some of the developments in the financial system that could allow the popping of the housing bubble to turn into a global crisis: the excessive use of borrowed money by investment banks, for example, and the deep insinuation of mortgage-related securities of questionable safety into the machinery of modern finance.”

[Kyle · Rating 4 out of 5]

Excellent narrative and reporting of what exactly happened in the leadup to the 2008 recession and the actions taken after the financial meltdown. I did not expect to enjoy this book as much as I did but it seemed to be accessible enough and gave an overview of the history of economics/printed money. I've a new appreciation for the work of central bankers and how their actions are often influenced, muddled, or dictated by present-day political systems in the United States & Europe. An unfortunate side of central banking is that, while I believe it protects everyone, it does seem to be in place so that the wealthy can maintain their luxuries without thought to anyone else's economic status/situation. Apparent is the fact that the 1% does always stand to benefit the most from a federalist or international approach to monetary policy.

[Julius · Rating 1 out of 5]

Über 400 Seiten gibt der Autor die Chronologie der Handlungen der Zentralbanken in der globalen Finanzkrise von 2007-09 wieder.

Für meine Begriffe ist der Fokus viel zu sehr auf wörtlicher Rede und extrem detaillierter Abläufe einzelner Meetings anstatt zunächst auf einer Metaebene die Mandate und das Handeln verschiedener Zentralbanken aufzuführen, um dann auf Abweichungen einzugehen.

Um diesem Buch mit Interesse folgen zu können, muss man sich entweder bereits sehr tiefgründig mit der Thematik und den Charakteren auseinander gesetzt oder einfach Lust auf Machtspielchen haben.

[Luis · Rating 4 out of 5]

As someone that was a kid when the financial crisis hit in 2007/2008, this is a great book to get up to speed and understand a bit what happened

Don’t get me wrong, I only got an idea of what happened but actually understand what, how and why is much more complex. Nevertheless; the book is easy to understand and you get the idea of what happened and how it propagated to the rest of the world.

It becomes a bit repetitive at times and you have to be into financials to like this book. But if you fit the mold, it’s a great read.

[Amid]

this Books versus Readers

Books are dots in Timeline from history to now. it narrarte and tells story just in one point of whole line. it never concludes story unless the readers suffice to conclude the story. so the book The Alchemists is result of group people before the time which the book was wrriten and a new start for people after the book's time was written.

And as a suggestion for Readers , this book is only for people who was not suggested to read this book but for people who consistently follow about World's powerful bankers and decion makers.

[Red · Rating 4 out of 5]

Interesting. Kind of scary when you realize how fragile as a world our money policy really is, but also somewhat reassuring because it's so intertwined that nobody has a firm interest in it all going down forever. My major cons was that it ended too early - I expected the final chapter to comment somehow on today and the wake of the events of the book but it barely did that - and that the author was a little 'fanboy' over Bernanke and it stood out from the rest of the tone of the book.

[Andrew Baker · Rating 3 out of 5]

The Alchemists provides an engaging history of the GFC with a heavy focus on the years following through the perspectives of Mervyn King, Jean-Claude Trichet, and Ben Bernanke. It is a nice blend of technical details about the crisis and personal narratives, including consequential quotes. I found the section on the Greek debt crisis particularly interesting. It did a good job of conveying the sensitive nature of the situation, describing how Greek protestors surrounded a hotel that ECB officials who were there to ensure deficit cuts were staying in. I liked the book because it told a good story, but it does not include an analysis of the economics of the crisis.

[Max Hoffman · Rating 4 out of 5]

Better than expected. The book was written in 2013 and is about central banking through crises. I assumed it was going to be 100% about the 2008 financial crisis, but was happy when that was just a small part of it. The book talks about central banks in Europe and Britain and China and how they dealt with different crises post-2008, which was interesting. The book did feel a bit long/boring at times, but overall pretty good

[Thomas Chau · Rating 3 out of 5]

The book is well researched and the material well put together and makes the subject easy to absorb. But it lacks true insight into the shadow players of our global financial system. The book makes heroes of the central banking chairmen and directs our attention to the root of the problem. I suppose that was the aim of the book.