{"product_id":"fed-up-isbn-9780735211650","title":"Fed Up","description":"\u003cb\u003eA Federal Reserve insider pulls back the curtain on the secretive institution that controls America’s economy\u003cbr\u003e\u003c\/b\u003e\u003cbr\u003e After correctly predicting the housing crash of 2008 and quitting her high-ranking Wall Street job, Danielle DiMartino Booth was surprised to find herself recruited as an analyst at the Federal Reserve Bank of Dallas, one of the regional centers of our complicated and widely misunderstood Federal Reserve System. She was shocked to discover just how much tunnel vision, arrogance, liberal dogma, and abuse of power drove the core policies of the Fed.\u003cbr\u003e\u003cbr\u003e DiMartino Booth found a cabal of unelected academics who made decisions without the slightest understanding of the real world, just a slavish devo­tion to their theoretical models. Over the next nine years, she and her boss, Richard Fisher, tried to speak up about the dangers of Fed policies such as quanti­tative easing and deeply depressed interest rates. But as she puts it, “In a world rendered unsafe by banks that were too big to fail, we came to understand that the Fed was simply too big to fight.”\u003cbr\u003e\u003cbr\u003e Now DiMartino Booth explains what \u003ci\u003ereally \u003c\/i\u003ehappened to our economy after the fateful date of December 8, 2008, when the Federal Open Market Committee approved a grand and unprecedented ex­periment: lowering interest rates to zero and flooding America with easy money. As she feared, millions of individuals, small businesses, and major corporations made rational choices that didn’t line up with the Fed’s “wealth effect” models. The result: eight years and counting of a sluggish “recovery” that barely feels like a recovery at all.\u003cbr\u003e\u003cbr\u003e While easy money has kept Wall Street and the wealthy afloat and thriving, Main Street isn’t doing so well. Nearly half of men eighteen to thirty-four live with their parents, the highest level since the end of the Great Depression. Incomes are barely increasing for anyone not in the top ten percent of earners. And for those approaching or already in retirement, extremely low interest rates have caused their savings to stagnate. Millions have been left vulnerable and afraid.\u003cbr\u003e Perhaps worst of all, when the next financial crisis arrives, the Fed will have no tools left for managing the panic that ensues. And then what?\u003cbr\u003e\u003cbr\u003e DiMartino Booth pulls no punches in this exposé of the officials who run the Fed and the toxic culture they created. She blends her firsthand experiences with what she’s learned from dozens of high-powered market players, reams of financial data, and Fed docu­ments such as transcripts of FOMC meetings.\u003cbr\u003e\u003cbr\u003e Whether you’ve been suspicious of the Fed for decades or barely know anything about it, as DiMartino Booth writes, “Every American must understand this extraordinarily powerful institution and how it affects his or her everyday life, and fight back.”“This view from the inside is not to be missed.” \u003cbr\u003e —\u003cb\u003eA. GARY SHILLING\u003c\/b\u003e, president of A. Gary Shilling \u0026amp; Co., Inc.\u003cbr\u003e\u003cbr\u003e “Danielle DiMartino Booth has written an informed, thoughtful, eye-opening—and justifiably angry—memoir of her days at the Federal Reserve. A monetary broadside for our populist world.”\u003cbr\u003e —\u003cb\u003eJAMES GRANT\u003c\/b\u003e, publisher of \u003ci\u003eGrant’s Interest Rate Observer\u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e “An outsider-turned-insider gives a gripping account of how false, but stubbornly held beliefs at the Fed helped create the global economic crisis as well as contribute to rising inequality in the United States. Brutally honest and engagingly written . . . A mustread.” \u003cbr\u003e —\u003cb\u003eWILLIAM R. WHITE\u003c\/b\u003e, former economic adviser and head of the monetary and economic department at the Bank for International Settlements\u003cbr\u003e\u003cbr\u003e “Penned with bold prose and laced with compelling arguments, Booth delineates the exact reasons that the Fed has failed America and why America should abandon the Fed. \u003ci\u003eFed Up \u003c\/i\u003eis a must-read tale of the over-reaching power, unfettered egos and clueless bravado that struck at the core of American stability, and must do so no longer.”\u003cbr\u003e —\u003cb\u003eNOMI PRINS\u003c\/b\u003e, author of \u003ci\u003eAll the Presidents’ Bankers \u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e “The road to hell is paved with good intentions. [Booth] personalizes and clearly explains the influence, the danger, and the consequences of monetary activism gone wild.” \u003cbr\u003e —\u003cb\u003ePETER BOOCKVAR\u003c\/b\u003e, chief market analyst at The Lindsey Group\u003cbr\u003e\u003cbr\u003e “This book is a must read for every American who wants to stay informed and educated about our financial future.” \u003cbr\u003e —\u003cb\u003eALLEN WEST\u003c\/b\u003e, member of the 112th US Congress\u003cbr\u003e\u003cbr\u003e “If you want to read a strong counterpoint—from the perspective of a lonely non-Keynesian within the Fed—to the ‘we saved the world’ narratives of those who led us to zero yields, asset bubbles, and a fast-shrinking middle class, this is it.“ \u003cbr\u003e —\u003cb\u003eROB ARNOTT\u003c\/b\u003e, chairman of Research Affiliates\u003cbr\u003e\u003cbr\u003e “Danielle DiMartino Booth proves that insightful technical analysis and hilarious anecdotes can exist between the covers of the same book.” \u003cbr\u003e —\u003cb\u003eJAMES RICKARDS\u003c\/b\u003e, author of \u003ci\u003eThe Road to Ruin\u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e “Booth’s insider status, captivating personality, mellifluous writing style, and keen sense of observation are wrapped up into a thoughtful analysis of our country’s dependency on the Fed and the worrisome consequences of that addiction.”\u003cbr\u003e —\u003cb\u003eDOUGLAS A. KASS\u003c\/b\u003e, founder and president of Seabreeze Partners Management Inc.\u003cbr\u003e\u003cbr\u003e“DiMartino Booth combines a lively writing style with careful research, quotes and annotations. Her first-hand account, which juxtaposes the complacency inside the Fed with the unfolding crisis outside, should appeal to a wide range of readers, from critics of the Fed and market participants to the average person eager to learn how monetary policy is conceived and executed.”\u003cbr\u003e\u003cb\u003e–CAROLINE BAUM\u003c\/b\u003e, MarketWatch\u003cb\u003eDanielle DiMartino Booth \u003c\/b\u003eis the founder of Money Strong, LLC, an economic consulting firm. She began her career in New York at Donaldson, Lufkin \u0026amp; Jenrette and Credit Suisse, where she worked fixed income and the public and private equity markets. After work­ing as a financial columnist at the \u003ci\u003eDallas Morning News\u003c\/i\u003e, DiMartino Booth spent nine years as an adviser to Richard Fisher at the Federal Reserve Bank of Dallas. She lives in Dallas with her family.Chapter 1\u003cbr\u003e\u003cbr\u003e \"Groupstink\"\u003cbr\u003e\u003cbr\u003e Never in the field of monetary policy was so much gained by so few      at the expense of so many.\u003cbr\u003e\u003cbr\u003e -Michael Hartnett, Bank of America Merrill Lynch        chief investment strategist, November 1, 2015\u003cbr\u003e\u003cbr\u003e Early morning, December 16, 2008, with a drizzle of freezing rain      falling, few would even glance at the line of inconspicuous      Mercury Marquis sedans pulling up to Washington, DC's Fairmont      Hotel. Emerging from the luxurious four-star establishment, their      Foggy Bottom home eight times a year, are eleven little-known      bureaucrats with their contingent of requisite subordinates.\u003cbr\u003e\u003cbr\u003e There is no fanfare to mark the coming momentous decision they are      to take on as they comfortably settle in for the ten-minute      caravan to the neoclassical white marble edifice known as the      Marriner S. Eccles Federal Reserve Board Building, located at      Twentieth Street and Constitution Avenue NW.\u003cbr\u003e\u003cbr\u003e Another half dozen of their peers had already left their homes in      nearby Georgetown or some other Washington suburb and they too are      making their way to the same address for the all-important 9 a.m.      meeting.\u003cbr\u003e\u003cbr\u003e Only one of these bureaucrats-the chairman, a mild-mannered former      professor-might have been recognized in an American airport. The      rest-unelected, immune to political pressure, mostly academics,      and save one, inexperienced in the intricacies of running a major      corporation, or even a small business-were virtually invisible      outside the narrow world they inhabited despite the enormous power      they wielded.\u003cbr\u003e\u003cbr\u003e As these seventeen people arrived, they stowed their coats and      umbrellas, grabbed a cup of coffee or tea, and mingled, the low      hum of their conversation perhaps more subdued than on similar      occasions. The day before, the first of the two-day affair, had      been extraordinary in both the dire picture it painted of the      American economy and the realization that they would have to take      bold and unprecedented action.\u003cbr\u003e\u003cbr\u003e That next sleety morning, they met again, determined to take      action to prop up a faltering Wall Street, hopelessly mired in the      greatest financial crisis since the Great Depression. Even as they      convened, the wreckage of the previous three months still burned      around them. Credit markets had seized up and fears for the fate      of the economy were mounting.\u003cbr\u003e\u003cbr\u003e With a few exceptions, virtually all of those at the meeting were      PhD economists who had earned doctorates at MIT, Yale, Harvard,      Princeton, and other top American universities. They met under the      auspices of the Federal Open Market Committee (FOMC), the      decision-making body of the Federal Reserve System. They believed      a lifetime of study in economic theory and monetary policy had      given them unique insight to steer policy for the most powerful      central bank in the world, the lender of last resort for failing      Wall Street banks, and the U.S. government's last line of defense      against utter financial chaos.\u003cbr\u003e\u003cbr\u003e Created in 1913 after the Panic of 1907, the Federal Reserve was      founded to keep the public's faith in the buying power of the U.S.      dollar. After failing miserably in the 1930s, the Fed aimed to be      more responsive. This led the institution to find discipline in      the rising macroeconomic models championed by top monetary      theorists. During the ensuing \"Quiet Period\" in American banking,      deposit insurance prevented panics, the Fed controlled interest      rates and manipulated the money supply, and though occasional      disruptions flared, like the failure of Continental Illinois      National Bank and Trust Company in 1984, no systemic risk erupted      for seventy years. The Fed had tamed the volatile U.S. economy.\u003cbr\u003e\u003cbr\u003e Until September 2008, when all hell broke loose in a worldwide      panic that completely blindsided and, embarrassed the Federal      Reserve. The Fed had used billions of dollars in taxpayer funds to      bail out Wall Street fat cats. Everyone blamed the Fed.\u003cbr\u003e\u003cbr\u003e Just before 9 a.m., the door to the chairman's office opened.      Federal Reserve Chairman Ben Bernanke took his place in an      armchair at the center of a massive oval table. The members of the      FOMC found their designated places around the table; aides sat in      chairs or couches against the wall. With staff, the room contained      fifty or sixty people, far more than normal for this momentous      occasion.\u003cbr\u003e\u003cbr\u003e In front of each FOMC member was a microphone to record their      words for posterity. To a casual observer, the content of their      conversation would be obscured by economic jargon.\u003cbr\u003e\u003cbr\u003e This day, their essential task was to vote on whether to take the      \"fed funds\" rate-the interest rate at which banks lent money to      each other in the overnight market-to the zero bound. The      history-making low rate would ripple throughout the economy,      affecting the price to borrow for businesses and consumers alike.\u003cbr\u003e\u003cbr\u003e Bernanke was calm but insistent. His lifetime of study of the      Great Depression indicated this was the only way. His sheer depth      of knowledge about the Fed's mishandling of that tragic period was      undoubtedly intimidating.\u003cbr\u003e\u003cbr\u003e By the end of the meeting, the vote was unanimous. The FOMC      officially adopted a zero-interest-rate policy in the hopes that      companies teetering on the brink of insolvency would keep the      lights on, keep employees on their payrolls, and keep consumers      spending. It would even pay banks interest on deposits.\u003cbr\u003e\u003cbr\u003e Free cash. We'll even pay you to take it!\u003cbr\u003e\u003cbr\u003e As they gathered their belongings, everyone shook hands, all very      collegial despite the sometimes vigorous discussion. They      journeyed back to their nice homes in the toniest neighborhoods of      America's richest cities: New York, Boston, Philadelphia, Chicago,      Dallas, San Francisco, Washington, DC.\u003cbr\u003e\u003cbr\u003e They returned to their lofty perches, some at the Eccles Building,      others to the executive floors of Federal Reserve District Bank      buildings, safely cushioned from the decision they had just made.      Most of them were wealthy or had hefty defined benefit pensions.      Their investments were socked away in blind trusts. They would      feel no pain in their ivory towers.\u003cbr\u003e\u003cbr\u003e It took a few months, but the Fed's mouth-to-mouth resuscitation      brought gasping investment banks and hedge funds and giant      corporations back to life. Wall Street rejoiced.\u003cbr\u003e\u003cbr\u003e But the Fed's academic models never addressed one basic question:      What happens to everyone else?\u003cbr\u003e\u003cbr\u003e In the decade following that fateful day, everyday Americans began      to suffer the aftereffects of the Fed's decision. By 2016, the      interest rate still sat at the zero bound and the Fed's balance      sheet had ballooned to $4.5 trillion, thanks to the Fed's      \"quantitative easing\" (QE), the label given its continuing      purchases of Treasuries and mortgage-backed securities.\u003cbr\u003e\u003cbr\u003e To what end? All around are signs of an economy frozen in motion      thanks to the Fed's bizarre manipulations of monetary policy, all      intended to keep the economy afloat.\u003cbr\u003e\u003cbr\u003e The direct damage inflicted on our citizenry begins with our      youngest minds and scales up to every living generation in our      country's midst.\u003cbr\u003e\u003cbr\u003e The journey could begin anywhere, but let's start in Erie,      Pennsylvania, an area of the country that was struggling even      before 2008. The Fed's high interest rates in the 1980s killed its      steel and auto industries. The zero bound has dealt the region      another devastarting blow. Now, in an Erie elementary school      students are given stapled copies of \"Everyday Mathematics\"      instead of an actual textbook. After a snowstorm, twenty-one      buckets were deployed to catch leaks because there was no money to      repair the roof. In the last five years, the Erie school district      has laid off one fifth of its employees and closed three schools      to cut costs. School officials are being forced to divert budgets      earmarked for kids and facilities to cover the shortfall in its      teacher pension fund, starved for yield in a zero-interest-rate      environment where bonds return only 1 to 2 percent.\u003cbr\u003e\u003cbr\u003e This is not limited to Erie. By mid-2016, long-term returns for      U.S. public pensions have dropped to the lowest levels ever      recorded-a $1.25 trillion funding gap-forcing pension fund      managers from New York to California to resort to ever-riskier      investments to meet their legal obligations-and to cut services to      make up the shortfall.\u003cbr\u003e\u003cbr\u003e Ruining Americans' pension systems? The professor and the FOMC had      not anticipated that particular side effect.\u003cbr\u003e\u003cbr\u003e And then there are the millennials, the 77 million young people      born between 1980 and 1995. As private equity surged into real      estate, purchasing homes to be used as rentals in search of higher      yields, house prices have soared and the market share of      first-time home buyers has dropped to its lowest level in almost      thirty years. Nearly half of males and 36 percent of females age      eighteen to thirty-four live with their parents, the highest level      since the 1940s.\u003cbr\u003e\u003cbr\u003e Delaying household formation and all the consumer spending that      goes with that? Not on the FOMC's radar.\u003cbr\u003e\u003cbr\u003e Even with mortgage rates at record lows, stagnant wages have made      it difficult for millennials to amass down payments. Builders      anxious to maximize returns now focus on constructing expensive      houses, leaving fewer starter homes for sale in urban areas      favored by today's young adults. It is an ominous trend for baby      boomers. For many, home equity makes up the bulk of their      retirement savings.\u003cbr\u003e\u003cbr\u003e Killing the move-up housing market? Nope, the FOMC didn't foresee      that either.\u003cbr\u003e\u003cbr\u003e Chances are pretty good that most boomers didn't get the gist of      the statement released by the Fed on that December day in 2008. A      certificate of deposit (CD) now pays a hair above nothing. Those      boomers-my mom among them-have taken a long hard look at their      retirement accounts and realized with a sense of dread that a      lifetime of scrimping and risk-averse investing has left their      nest eggs vulnerable to serious erosion.\u003cbr\u003e\u003cbr\u003e With interest rates on CDs near zero, the average boomer household      would need $10.6 million in principal to safely earn $15,930 in      interest, the annual income at the federal poverty-line level for      a family of two.\u003cbr\u003e\u003cbr\u003e Do your folks have $10 million in savings? Mine don't.\u003cbr\u003e\u003cbr\u003e Of course, with $10 million, CDs might not be on the table, but      that's the point. Several hundred thousand dollars won't do the      trick without undue risk for aging boomers.\u003cbr\u003e\u003cbr\u003e The members of the FOMC knew their decision would screw savers and      the risk-averse elderly. They didn't care. They couldn't afford      to. Even when well-intentioned smart people save the world, there      are always a few, or in this case, millions of inevitable      casualties. C'est la vie!\u003cbr\u003e\u003cbr\u003e Sadly, there were no angry protests, no million-man marches on      Washington that sent shock waves through our country after the      FOMC issued its press release. Only the quiet, unheralded loss of      some fundamental freedoms: the freedom to save for our retirements      risk free, the freedom to sleep in peace knowing our pensions are      safe, and the freedom for U.S. companies to invest in our nation's      future.\u003cbr\u003e\u003cbr\u003e The FOMC's vote during its final meeting of 2008 didn't come from      nowhere. It was part of a long tradition of economic interference      by well-meaning bureaucrats, going back to the 1930s and      accelerating with Federal Reserve Chairman Alan Greenspan in the      1980s.\u003cbr\u003e\u003cbr\u003e Greenspan championed the era of financial deregulation that drove      Wall Street to levels of greed that surprised even the most      hardened investment banking veterans.\u003cbr\u003e\u003cbr\u003e His pragmatic response to every crisis on Wall Street? Lower      interest rates, which Greenspan did again and again and again.      Blow bubbles and pray they don't pop.\u003cbr\u003e\u003cbr\u003e But they always do.\u003cbr\u003e\u003cbr\u003e In the late 1990s, dot-com companies soared far beyond true      valuations; reality pricked that balloon in 2001.\u003cbr\u003e\u003cbr\u003e In response, Greenspan again aggressively lowered interest rates      and blew another bubble, this time in housing, with catastrophic      results that led to the worldwide meltdown in 2008.\u003cbr\u003e\u003cbr\u003e In response, his successor, Ben Bernanke, followed suit, pushing      through a massive monetary policy experiment by lowering interest      rates to zero and using QE to flood America with easy money.\u003cbr\u003e\u003cbr\u003e He based his policies on a lifetime of academic study. His      theoretical models relied on the idea of the \"wealth effect,\"      first articulated by British economist John Maynard Keynes. The      concept assumed that free money would induce businesses to borrow,      invest, and hire more employees. They in turn would buy homes,      consume, and put savings into the stock market instead of CDs,      where they would earn little to no interest. As their assets rose      in value, people would spend more.\u003cbr\u003e\u003cbr\u003e The resulting wealth-effect tide would lift all boats. Hailed as a      genius by other academics, Bernanke had every confidence his      theories would work.\u003cbr\u003e\u003cbr\u003e When they didn't, when the American economy continued to stagger,      Bernanke doubled down. His models couldn't be wrong; something      else must be holding back the economy.\u003cbr\u003e\u003cbr\u003e Janet Yellen, who followed Bernanke as Fed chair, maintained his      radical policies with gusto, determined that households and      businesses would invest, buy, consume, damn it! Though many on the      FOMC sought an exit plan, Yellen was even more married to the      Keynesian model of economic growth than Bernanke. She continued to      advocate for more QE, and has even raised the specter of negative      interest rates.\u003cbr\u003e\u003cbr\u003e But real people haven't responded the way academics anticipated in      their wealth-effect models. Individuals, small businesses, and      corporations alike have been flummoxed by Fed policy and made      their own rational choices unforeseen by the FOMC.\u003cbr\u003e\u003cbr\u003e Cheap money, combined with uncertainty about the regulatory and      tax landscape, has encouraged corporations to buy back their      shares rather than invest in their future. Companies in the      S\u0026amp;P 500 Index-the benchmark for America's top five hundred      publically listed companies-dispersed more than $600 billion to      buy back their stock in 2014, and more than $500 billion in 2015.\u003cbr\u003e\u003cbr\u003e This strategy has been employed by companies as diverse as Apple,      Bank of America, and ExxonMobil, which lost its prized AAA credit      rating after one hundred years, based partially on the record      amount of debt it incurred to buy back shares. Since 2005, U.S.      corporations have disbursed an estimated $296,000 on share      buybacks for every single new employee who has been hired.\u003cbr\u003e\u003cbr\u003e Because that's the way the world works.\u003cbr\u003e\u003cbr\u003e \"No wonder share buybacks and corporate investment into research      and development have moved inversely in recent years,\" wrote Rana      Foroohar in an op-ed in the Financial Times on May 15, 2016. \"It      is easier for chief executives with a shelf life of three years to      try to please investors by jacking up short-term share prices than      to invest in things that will grow a company over the long haul.\"\u003cbr\u003e\u003cbr\u003e Compared to the immediate post-World War II period, some American      corporations now earn about five times more revenue from purely      financial activities such as trading, hedging, tax optimization,      and selling financial services, as compared to their core      businesses.\u003cbr\u003e\u003cbr\u003e As a result, the labor market has atrophied. Though lots of      so-called eat, drink, and get sick jobs-for waiters, bartenders,      and health care workers-have been created, Fed policy effectively      pulled the plug on long-term investment and compromised      high-paying job growth.\u003cbr\u003e\u003cbr\u003e By mid-2015, only 62.6 percent of adult workers were employed or      actively looking for a job, the lowest in nearly four decades. The      so-called shadow unemployment rate is estimated to be as high as      23 percent. Many of these people will never come back into the      workforce.","brand":"Portfolio","offers":[{"title":"Default Title","offer_id":46300752412901,"sku":"NP9780735211650","price":30.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780735211650.jpg?v=1767726794","url":"https:\/\/k12savings.com\/es\/products\/fed-up-isbn-9780735211650","provider":"K12savings","version":"1.0","type":"link"}