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Inside the Fed: Monetary Policy and Its Management, Martin Through Greenspan to Bernanke
Stephen Axilrod is the ultimate Federal Reserve insider. He worked at the Fed's Board of Governors for over thirty years and after that in private markets and as a consultant on monetary policy. With Inside the Fed, he offers his unique perspective on the inner workings of the Federal Reserve System during the last fifty years—writing about personalities as much as policy—based on his knowledge and observations of every Fed chairman since 1951.
Axilrod's discussion focuses on how the personalities of the various chairmen affected their capacity for leadership. He describes, for example, Arthur Burns's response to political pressure from the Nixon White House and Paul Volcker's radical shift to an anti-inflationary policy at the end of the 1970s—a transition in which Axilrod himself played a crucial role. As for the Greenspan years, Axilrod points to the unintended effects of the Fed's newfound "garrulousness" (the plethora of announcements and hints about policy intentions)—one of which was the Fed's loss of credibility in the aftermath of the chairman's 1996 comment about "irrational exuberance." And Axilrod incisively outlines the problems—including the subprime mess—inherited from Greenspan by the current chairman, Ben Bernanke. Great leadership in monetary policy, Axilrod says, is determined not by pure economic sophistication but by the ability to push through political and social barriers to achieve a paradigm shift in policy—and by the courage and bureaucratic moxie to pull it off.
Axilrod's discussion focuses on how the personalities of the various chairmen affected their capacity for leadership. He describes, for example, Arthur Burns's response to political pressure from the Nixon White House and Paul Volcker's radical shift to an anti-inflationary policy at the end of the 1970s—a transition in which Axilrod himself played a crucial role. As for the Greenspan years, Axilrod points to the unintended effects of the Fed's newfound "garrulousness" (the plethora of announcements and hints about policy intentions)—one of which was the Fed's loss of credibility in the aftermath of the chairman's 1996 comment about "irrational exuberance." And Axilrod incisively outlines the problems—including the subprime mess—inherited from Greenspan by the current chairman, Ben Bernanke. Great leadership in monetary policy, Axilrod says, is determined not by pure economic sophistication but by the ability to push through political and social barriers to achieve a paradigm shift in policy—and by the courage and bureaucratic moxie to pull it off.
203 pages, Hardcover
First published February 6, 2009
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Displaying 1 - 3 of 3 reviews
May 4, 2015
Despite promising an inside look at the Federal Reserve, this book consists largely of a former insider's opinions on U.S. monetary policy over the past 50 years. Although obviously well-informed and intriguing, these offer little more than one would find in any major American newspaper. The real meat of the book, Axilrod's discussions of his time as a major researcher in the Federal Reserve's Research Division dealing with monetary policy from the late 1960s to the early 1980s, takes up no more than about 40 pages of this already slim book. His descriptions are worthwhile, but one has to claw through a lot of shell to get to the nut of them.
Axilrod does point out the importance of the "blue book" (assembled by his staff) of economic projections and policy possibilities in determining Federal Reserve actions. Although Arthur Burns and a few other Fed governors did make some minor attempts to influence these projections, Axilrod shows that the staff was almost omnipotent and independent in its writing. It's blue book set up the field on which the Federal Reserve subsequently played, and there was little the Board of Governors could do before or afterwards to change it. Axilrod also reinforces the now commonplace that Chairman Paul Volcker's switch to "monetarist" policy at the famous Saturday Night Special (October 6, 1979) announcement was merely a way to fight inflation without appearing to vote for high interest rates. Axilrod shows Volcker worked feverishly in the two months after his appointment to set up some plausible way for the Fed to control the amount of total money in the economy, but then paid little attention to the actual amount as he watched interest rates careen upwards.
The minutiae of the book is probably its most informative part. For instance, Axilrod describes how Arthur Burns generally dismissive attitude towards him led the New York Bank's trading desk to take a dismissive attitude of him too when he informed them of Burn's intentions, which severed the link between the DC Board's goals and its actual actions on the ground.
It helps the book that Axilrod comes across as a genial, intelligent, and genuinely concerned individual. In the end though, I wish the reader got more of his personal perspective and less of his opinions.
Axilrod does point out the importance of the "blue book" (assembled by his staff) of economic projections and policy possibilities in determining Federal Reserve actions. Although Arthur Burns and a few other Fed governors did make some minor attempts to influence these projections, Axilrod shows that the staff was almost omnipotent and independent in its writing. It's blue book set up the field on which the Federal Reserve subsequently played, and there was little the Board of Governors could do before or afterwards to change it. Axilrod also reinforces the now commonplace that Chairman Paul Volcker's switch to "monetarist" policy at the famous Saturday Night Special (October 6, 1979) announcement was merely a way to fight inflation without appearing to vote for high interest rates. Axilrod shows Volcker worked feverishly in the two months after his appointment to set up some plausible way for the Fed to control the amount of total money in the economy, but then paid little attention to the actual amount as he watched interest rates careen upwards.
The minutiae of the book is probably its most informative part. For instance, Axilrod describes how Arthur Burns generally dismissive attitude towards him led the New York Bank's trading desk to take a dismissive attitude of him too when he informed them of Burn's intentions, which severed the link between the DC Board's goals and its actual actions on the ground.
It helps the book that Axilrod comes across as a genial, intelligent, and genuinely concerned individual. In the end though, I wish the reader got more of his personal perspective and less of his opinions.
August 7, 2019
Helpful. This book will stretch your mind, and will probably require you to read it a few times.
Like Robert Rubin's In an Uncertain World , this is a valuable trip through a world that spans the globe and amidst choices that aren't so obvious. Axilrod's dry humor and sense of personal anecdotes are, of course, the prerequisites for a sane guide through these waters, and he qualifies in spades.
Well worth reading.
Like Robert Rubin's In an Uncertain World , this is a valuable trip through a world that spans the globe and amidst choices that aren't so obvious. Axilrod's dry humor and sense of personal anecdotes are, of course, the prerequisites for a sane guide through these waters, and he qualifies in spades.
Well worth reading.
December 31, 2021
Quite possibly the most boring writer I've ever come across. The subject was fine, but this guy should be paid to bore people to death because he would become a very wealthy man.
Displaying 1 - 3 of 3 reviews