The federal banking system has built a house of cards, Leonard cogently warns. Expect it to fall any minute now.
A financial journalist offers a contrarian view of the workings of the Federal Reserve.
“The word dollar is…just a slang term for American currency, which is actually called a Federal Reserve Note.” So writes Leonard, author of Kochland: The Secret History of Koch Industries and Corporate Power in America, at the beginning of this investigation into the complexities of how money works. There’s nothing in the Constitution that mandates a central bank, and the U.S. essentially operated without one until the early 20th century. That such a bank was founded was a result of populist demand, and an irony lies in the fact that the Federal Reserve’s last two decades of decisions have so favored the wealthy that it serves as an engine of inequality. It does this through several doubtful stratagems, including printing money in unprecedented quantities, such that “the amount of excess money in the banking system swelled from $200 billion in 2008 to $1.2 trillion in 2010, an increase of 52,000 percent.” This vast pool of cash, an instrument of what economists call quantitative easement, is meant to stimulate the economy in relatively nonspeculative ways. However, with the cost of borrowing at zero and even below-zero interest, the banks have been encouraged to take huge risks, since that’s where the profit lies. Awash in federal cash, too, the banks have not channeled it where it was meant to go, namely Main Street, but instead pushed it into the hands of the already wealthy. Using a former Federal Reserve banker named Thomas Hoenig as his Virgil, Leonard shows how the economic crises of the last two decades are the products of “an economic system that had stopped working for a majority of Americans,” driven by bankers but filtered through such creatures as “zombie companies,” entities “that carried so much debt that…profits weren’t enough to cover…loan costs.” Zombies eat brains—but they can also devour whole economies, including ours.
The federal banking system has built a house of cards, Leonard cogently warns. Expect it to fall any minute now.Pub Date: Jan. 11, 2022
ISBN: 978-1-982166-63-2
Page Count: 368
Publisher: Simon & Schuster
Review Posted Online: Nov. 16, 2021
Kirkus Reviews Issue: Dec. 1, 2021
BOOK REVIEW
BOOK REVIEW
An accessible audit of Russia's efforts to gain a place at global capitalism's table after more than seven decades of Communist misrule and mismanagement. As Goldman (Economics/Wellesley; What Went Wrong with Perestroika, 1991, etc.) makes abundantly clear, switching from a centrally planned economy to a market economy is easier said than done. Goldman draws on in-country contacts, official records, and contemporary news reports to document how Moscow has gone wrong at critical junctures since 1985, when Mikhail Gorbachev first set the Soviet Union on a restructuring course whose implications he did not fully grasp. After a lucid account of the sociopolitical events that allowed Boris Yeltsin to oust Gorbachev (in effect, by undermining the USSR), the author offers an unsparing critique of the current incumbent's stewardship. Like his unfortunate predecessor, Goldman points out, Yeltsin failed to facilitate the formation of new businesses. Nor did he and his chief adviser (Yegor Gaidar) do enough to encourage land ownership. They also neglected to institute currency reforms that could have dampened inflationary pressures and enhanced the ruble's convertibility. Banking, price control, and tax policies were botched as well; the regime has dithered disastrously on privatizing state-owned enterprises; and the government has yet to sponsor commercial codes that might restore much-needed order to a chaotic, crime-ridden consumer marketplace. The author goes on to weigh Russia's makeover prospects in the context of the bootstrap recoveries achieved by former Kremlin satellites (Hungary, Poland), mainland China, and WW II's losers (Japan, West Germany). Even without much foreign aid or investment in the short run, concludes Goldman, the Russians could eventually win their latest revolution, albeit at no small cost. An informed and informative analysis of the toil and trouble attendant upon a great nation's attempts to gain world-class status as an economic rather than military power. Helpful tabular material and graphs throughout.
Pub Date: Oct. 1, 1994
ISBN: 0-393-03700-2
Page Count: 300
Publisher: Norton
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: Aug. 1, 1994
BOOK REVIEW
An informative if overlong account of how American car makers regained much of the ground they had lost during the 1980s to foreign rivals in their own backyard and Europe. Drawing mainly on their own reportage as Detroit-based correspondents for The Wall Street Journal, Ingrassia and White offer a lively series of set pieces illustrating how Motown's Big Three (Chrysler, Ford, General Motors) managed to avert envelopment by their Japanese counterparts (Honda, Nissan, Toyota, et al.) and to launch an impressively effective counterattack. In large measure, the authors conclude, the improvement in the US industry's fortunes is attributable to its capacity to adopt and adapt the cost-control, employee-empowerment, productivity, and quality- assurance techniques pioneered by Japanese manufacturers. As Ingrassia and White make clear, however, the makeover was convulsive on the assembly line as well as in the executive suite. The authors do a fine job of reconstructing the boardroom coups that resulted in the ouster of such old-guard stalwarts as Chrysler's Lee Iacocca, Ford's Don Peterson, and GM's Bob Stempel (the unfortunate engineer who inherited the god-awful mess Roger Smith had made of the planet's largest commercial enterprise). Covered as well are the lesser lights who designed the passenger vehicles (Chrysler's Neon and Ford's born-again Mustang among others), plus the plant managers who reconciled the requirements of lean production with the aspirations of a unionized work force accustomed to adversarial labor relations. On the minus side of the ledger, Ingrassia and White have not resisted the temptation to include whatever they've learned in more than a decade on the automotive beat, and their narrative occasionally veers into trivial byways. Nonetheless, an engrossing and cautionary take on a consequential industry whose welfare is everybody's business. (16 pages of photos, not seen) (First serial to the Wall Street Journal; author tour)
Pub Date: Sept. 28, 1994
ISBN: 0-671-79214-8
Page Count: 496
Publisher: Simon & Schuster
Review Posted Online: June 24, 2010
Kirkus Reviews Issue: Aug. 1, 1994
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