Books To Get You Thinking

Five years following the outbreak of one of the world’s most serious financial crises since the Great Depression of the 1930s, the economic outlook in the US and the world continues to be dominated by stagnating rates of growth as well as high rates of  unemployment and rising levels of public debt. Some recent books on the subject available at the Mercer County Library do an outstanding job of providing a comprehensive picture of the diverse factors leading to the 2008 financial debacle and the unique and important role played by the Federal Reserve in the US in curtailing the damaging effects of the crisis. The critically important question of what lies ahead and the policies and institutional changes we need to prevent such a crisis from reoccurring are also discussed by eminent authorities in the field.

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan Blinder
Alan Blinder, one of the country’s leading economists, Professor at Princeton University and former Vice Chairman of the Federal Reserve has written a comprehensive account of the 2008 financial crisis which includes an analysis of the complex set of factors that were instrumental in triggering the crisis and turning it into a global phenomenon, and the government’s unprecedented efforts that helped contain its severity and impact. Having penned the book five years after the onset of the crisis, the author has the advantage of being able to view the events in their entirety and address the important question of what steps are needed to finally end the stagnation and unemployment that continue to plague the US and much of the world today.  Central to Blinder’s analysis is the belief that the economic crisis erupted from the convergence of a seemingly unrelated set of phenomenon, triggering a collapse in the financial infrastructure of the economy. Some of the  leading causes include subprime mortgages, a financial system that was overly complex and leveraged, and a lack of adequate economic regulations.

The Alchemists: Three Central Bankers and a World on Fire by Neil Irwin
A riveting and engaging narrative  by Washington Post columnist Neil Irwin  that enables readers  with little prior knowledge of economics or finance to gain insight into the way the global financial system works, its underpinnings and  interdependencies. The author provides a unique glimpse into the complex decision-making that occurred involving three powerful and influential personalities prominent in the aftermath of the 2008 financial collapse: Ben Bernanke of the US Federal Reserve, Mervyn King leading the Bank of England, and Jean-Claude Trichet from the European Central Bank. The power of the central banks was effectively used through a system of monetary policy interventions in the financial markets designed to avert a global collapse of the financial system.  Especially fascinating is the historical account dating back to the 1800s that highlights the evolution of the banking system and the pivotal role that banks and monetary policies have played historically in times of economic crisis.

End This Depression Now by Paul Krugman
Nobel Laureate and Professor of Economics at Princeton University, the author is also a regular contributor to the New York Times. With remarkable clarity, Krugman provides a lucid, thought-provoking analysis of the 2008 economic crisis, discussing the complex origins of the crisis -  he examines the evolution of the US financial and banking industry over time, the effects of financial deregulation and the role these played in triggering the economic collapse.  Critically examining the mix of policy measures that were used in response, Krugman demonstrates that  while the intervention by the government was successful in curtailing the damaging financial impact of the crisis from spreading and becoming endemic, the US economy continues to stagger under high levels of unemployment.  Krugman provides a strong rationale for an economic strategy that hinges on an active fiscal and monetary policy that would dramatically increase liquidity and demand in the economy through public spending and would result in higher levels of production and job creation. He stresses the importance of a strong political will that could help make this an economic reality.

The Federal Reserve and the Financial Crisis by Ben Bernanke
Ben Bernake, chairman of the US Federal Reserve is perhaps one of the most influential figures in the current global capital market. This book is comprised of  a set of four lectures that Bernanke delivered at George Washington University in 2012  along with questions from students and his answers. He provides a fascinating history of the Federal Reserve and its developing role in the banking industry. Bernanke’s chronicle of the financial debacle of 2008, the factors leading up to it, and the subsequent intervention by the Federal Reserve, provides deep insights into the pivotal role played by the Fed acting as a lender of last resort, infusing $1.2 trillion to the financial industry and reining in the damaging  effects of the economic crisis. Bernanke highlights the importance of using both structural and economic regulatory measures alongside an active monetary policy to avert the dangers of a future financial crisis.

-Nita Mathur


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