The Fed: The Inside Story of How the World's Most Powerful Financial Institution Drives the Markets [Hardcover]

Martin Mayer (Author)

Book Description

Publication Date: June 11, 2001

The Federal Reserve system was designed, built and operated as an agency that forced its policies on American banks. The banks in turn had the power to push around the real economy. Now the Federal Reserve finds itself in a world where banks don't matter as much. Markets set interest rates, markets determine liquidity and markets help or hinder the plans of businessmen. Markets are unpredictable, international and, worst of all, they have their own information systems that do not follow the rules of banking or bank supervision. In response, the Federal Reseve has reinvented itself in a way not yet understood even by sophisticated investors. This text offers a look at the "new" Federal Reserve: what it does, what it doesn't do, what it must do, how it works, and how it hasn't changed. It looks at how the Federal Reserve judges market levels, how and when it decides to intervene, how it judges whether a hot economy will produce inflation or not, and many other decisions it makes.

Editorial Reviews

Amazon.com Review

Martin Mayer's engaging examination of the much-talked-about but little understood U.S. Federal Reserve begins with the dramatic events of October 1998, a month in which the market closed "lock limit down" for the first time in almost a decade. At the same time, Alan Greenspan, the Fed's chairman, began radically reinventing his agency's role and its influence on the market. Indeed, while most of the rest of the world's countries were diminishing the role of their central banks, Congress was granting new powers and responsibilities to the Fed. Mayer's book--part history, part journalistic report, and all detailed analysis--looks at the significance of those powers, their benefits and risks, and what they mean to the markets. He also devotes chapters to the day-to-day inner workings of the Fed, its influence in international financial matters, and its possible role in coming years.

As a prolific author and respected economics scholar, Mayer has been immersed in the financial world for decades and provides both bird's-eye and long-range views of money's complicated maneuverings. Without his excellent storytelling abilities and fluid writing style, this book would be heavy going for anyone who doesn't speak the language of high finance. Though it is most definitely dense (and its structure somewhat erratic), Mayer manages to make a complicated subject accessible for those with more interest than actual knowledge. An informative look at a hitherto enigmatic but influential institution. --S. Ketchum

From Publishers Weekly

To most investors, the Fed is one person Chairman Alan Greenspan whose job is to set interest rates. In this entertaining and enlightening account, popular financial journalist Mayer (The Bankers; The Greatest-Ever Bank Robbery) traces the evolution of the Federal Reserve from a sleepy regulatory agency to the most powerful economic institution in the world. Created in 1913, the Fed was designed to regulate banks in an era when they, and not the government, were assumed to control the economy; interest-rate setting was only a minor part of the agency's job. With the rise of a global economy in which individual banks no longer wield their former influence, the Fed has completely reinvented itself. Mayer, a guest scholar at the Brookings Institution and a regular contributor to the Wall Street Journal, tells of turf battles with the Treasury Department and the Federal Deposit Insurance Corporation, in addition to conflicts with bankers and foreign institutions. Although his tale involves extensive discussion of topics like check clearing, reserve assets and regulatory accounting, and most of the protagonists are staid, Mayer livens things up with irreverent character sketches, flamboyant prose (considering the subject matter) and canny storytelling. At the same time, he presents the historical and economic details accurately. (June Forecast: Written with the verve of a Vanity Fair magazine article, and supported by a 20-city radio satellite tour, this very topical book should attract fans of Mayer's previous books, in addition to investors who wish to make sense of the Fed's role in the market.

Copyright 2001 Cahners Business Information, Inc.

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Product Details

• Hardcover: 368 pages
• Publisher: Free Press (June 11, 2001)
• Language: English
• ISBN-10: 068484740X
• ISBN-13: 978-0684847405
• Product Dimensions: 9.6 x 6.4 x 1.1 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 2.7 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #1,131,102 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

23 of 24 people found the following review helpful:

5.0 out of 5 stars The Inside Story of the Fed, Just Like it Says, December 21, 2001

By 

Jim Seligman (USA) - See all my reviews

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This review is from: The Fed: The Inside Story of How the World's Most Powerful Financial Institution Drives the Markets (Hardcover)

This book will be enjoyed by those who want to see the Fed as a very human institution with its own quirks and foibles. It helps to add a dimension of knowledge about the Fed that is hard to get anywhere else.

If you are a hard core economist with strong political views or an ardent fan of Friedman or Greenspan you won't like it. It shows the human side of many of the major figures.

I thought it was well done and enjoyed it immensely. I have read most of the major books on the Fed and read their open market operations briefs every day, and spend a lot of time on the various Fed websites.

This book is generally sound, and although there are those who would tend to dismiss Mayer, as he is not an economic scholar, the great strength of this book is that Mayer realizes that the Fed is not a university seeking truth. It is a political and financial institution not above the day to day fray, with its own sort of organizational politics.

I have also read most of the major books about Greenspan, and this one adds a dimension to his persona that connected the dots for me.

16 of 21 people found the following review helpful:

2.0 out of 5 stars Missed its potential, July 24, 2001

By 

Steve Fast (Hillsboro, KS, USA) - See all my reviews
(REAL NAME)   

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This review is from: The Fed: The Inside Story of How the World's Most Powerful Financial Institution Drives the Markets (Hardcover)

This book contains a lot of excellent information about the development of the Federal Reserve System with many incidents that I had never heard of. However, the writing style is poor since the book is FILLED with cliches. Also the material is not well-organized with a lot of jumping from incident to incident. Lots of fascinating inside stories, but disappointing overall.

3 of 3 people found the following review helpful:

4.0 out of 5 stars Tempted to give five stars..., August 26, 2006

By 

framzimpet "framzimpet" - See all my reviews

This review is from: The Fed: The Inside Story of How the World's Most Powerful Financial Institution Drives the Markets (Hardcover)

Martin Mayer has been writing about banking for decades. He has held positions in government, and testified as an expert in various governmental committees. He has known personally many of the people about whom he is writing in this book.

His writing style is dense. He often assumes the reader is familiar with banking terms or processes (or can go look them up). If you can get through this, the information he provides is priceless. I came away from reading this book with a variety of insights into banking and the federal reserve that will continue to inform me for years to come. I have read a number of books on the fed, and this is certainly one of the best (along with Greiders).