THE CONFIDENCE GAME

This blue-chip status report makes a substantive contribution to the growing body of literature of the pivotal role played by central banks in in the Global Village's financial affairs (see Marjorie Deane and Robert Pringle's The Central Banks, 1995). Former Forbes reporter Solomon's principal accomplishment is providing accessible briefings on how America's Federal Reserve, the Bank of England, Germany's Bundesbank, and lesser lights have dealt (by default) with a weary world's financial traumas over the past two decades. Cases in point include management of recurrent less-developed-countries (LDC) debt crises; coordinating exchange- rate policy to keep the value of key currencies in line with economic realities; and responding to 1987's cataclysmic stock market crash (which the author employs as a leitmotif throughout his text). While monetary authorities (who attempt to control the stability and supplies of money in their own countries) have proved adept in working together in emergencies, Solomon observes that their success at staving off disaster raises a wealth of vital issues, not the least of which is the accountability of independent technocrats whose preoccupation is containment of inflationary pressures, not job-creating economic growth. Also of concern is dominion over a volatile new order in which stateless pools of capital could at almost any time swamp a global monetary system that has lacked anchors to windward since the 1970s collapse of the Bretton Woods accord. Covered as well are the manifold failures of fiscal policy in a variety of industrial powers (notably the US), the importance of sound money to democracy, the odds on the EU's creating a supranational central bank, and the resourceful (albeit potentially ruinous) means by which political leaders seek to buy time for their reelection campaigns or other purposes. An on-the-money introduction to the financial fraternity's ruling class.