Sobering. David Wessel, The Wall Street Journal’s economics editor, presents a measured and sobering account of the current financial crisis in his book, In Fed We Trust: Ben Bernanke’s War on the Great Panic. At each new crisis moment, Bernanke pushes to do whatever it takes to avoid a depression. Wessel shows that at the time of each action, there was a lack of sufficient pessimism that things could get worse. Mostly, the Fed was wrong, and things did got worse. I was struck by the challenges for decision makers given the rapid deterioration of companies, and the limited number of alternatives. The fact that the Fed had $800 billion in assets that it could deploy without oversight was a shocker. This is a time period that will receive increasing scrutiny and analysis in coming years. This timely account presents one version of whether or not the actions were the best that could have been taken at the time. The costs of the Fed’s decision s remain unknown, and Wessel’s revelation of the Fed as a fourth branch of government gives all readers a chance to reflect on whether or not that’s a situation that we as citizens will want to solidify.
Rating: Three-star (Recommended)