Inflated

Discover where America's monetary system is heading—and how it will impact you—in the years to come

In the newly revised second edition of Inflated: How Money & Debt Built the American Dream, veteran investment banker, author, and Chairman of Whalen Global Advisors LLC delivers the latest installment of his concise history of the United States' monetary system, putting contemporary financial phenomena like inflation and high housing costs into context. You'll learn to understand how issues like the public debt and the rise of cryptocurrencies can be understood through the lens of how the United States government exploits debt and the monetary system to fund its operations.

The author explains:

• How contemporary concepts like Modern Monetary Theory fit into and influence the American economy
• How and why the United States' debt has tripled in the last fifteen years and the necessary consequences of that increase
• The likelihood and potential impacts of another economic correction during the 2020s

An engrossing and essential read for anyone interested in the economic and monetary realities driving our markets, politics, and societies, the second edition of Inflated is an eye-opening discussion of the drastic changes unfolding in the American economy and the even more dramatic transformations that lie just beyond the horizon.

Preface xv

Introduction xv

Chapter 1 Free Banking and Private Money 1

The Bank of the United States 5

State Debt Defaults 10

The Age of Andrew Jackson 14

The Panic of 1837 19

The Gold Rush 23

Chapter 2 Lincoln Funds Civil War with Inflation 27

The Lincoln Legacy 29

Financing the War 32

Salmon Chase and Jay Cooke 36

Fisk and Gould Profit by Inflation 39

The Panic of 1873 43

Gold Convertibility Restored 46

Chapter 3 Robber Barons and the Gilded Age 55

Republicans Embrace Silver and Inflation 59

The Panic of 1893 62

The Cross of Silver 64

The Turning Point: 1896 66

Chapter 4 The Rise of the Central Bank 73

The Progressive: Theodore Roosevelt 75

A Flexible Currency 79

The Crisis of 1907 83

The National Monetary Commission 86

The Federal Reserve Act 91

Chapter 5 War, Boom, and Bust 99

An Elastic Dollar 107

A Return to Normalcy 113

The Roaring Twenties 116

New Era Finance 118

The Rise of Consumer Finance 121

America Transformed 123

Prelude to the Depression 128

Stocks Fall, Tariffs Rise 131

Deflation and Crash 1929 137

Chapter 6 New Deal to Cold War 145

Broken Promises 148

Gold Seizure and Devaluation 153

Devaluation and Tariffs 158Rise of the Corporate State 160

The Reconstruction Finance Corporation 166

Central Planning Arrives in Washington 171

Federal Deposit Insurance 173

Centralization of the Fed 176

Eccles and the Corporatist Revolution 183

America Goes to War 188

Wartime Finance 193

Bretton Woods 194

Chapter 7 Debt and Inflation 199

Revenues Grow 204

The Fed Regains Independence 207

Postwar Growth 210

Cold War, Free Trade 213

The Golden Age 218

Global Imbalances Return 222

Nixon’s Betrayal 226

The Dollar Peg Ends 227

Sovereign Dollar Debt 232

Chapter 8 Leveraging the American Dream 239

The New Uncertainty 243

Full Employment 249

Balanced Budgets and Inflation 254

Shock Treatment 258

The Crisis Managers 263

Latin Debt Crisis 268

Reagan Reappoints Volcker 272

The Neverending Crisis 275

Volatility Returns 278

Boom to Subprime Crisis 281

The Greenspan Legacy 284

Chapter 9 Financial Crisis and Malaise 289

Quantitative Easing 295

The Powell Pivot and COVID 305

The Fed Goes Big 311

Deficits and Central Bank Independence 319

Offshore Dollars and Taxes 325

Chapter 10 New American Dreams 333

The Growth Illusion 341

Inflation and Stagnation 345

A Flexible Currency 352

Tricentennial Dollar? 355

Endgame 358

Notes 365

Selected References 387

Acknowledgments 391

About the Author 393

Index 395

R. CHRISTOPHER WHALEN is an investment banker and author in New York City. He is Chairman of Whalen Global Advisors LLC, which focuses on the financial services, mortgage finance, and technology sectors. He has three decades’ experience as a writer and financial professional in Washington, New York, and London.

In the newly revised second edition of Inflated: Money, Debt, and the American Dream, veteran investment banker, author, and Chairman of Whalen Global Advisors LLC delivers the latest installment of his concise and insightful history of the United States’ monetary system. This book puts contemporary financial phenomena—like inflation and high housing costs—into context.

You’ll learn how to understand issues like the public debt and the rise of cryptocurrencies through the lens of how the U.S. government exploits debt and the monetary system to fund its operations. You’ll also discover how contemporary concepts like Modern Monetary Theory fit into and influence the American economy and the policymakers who drive it.

Inflated tells the story of how and why the U.S. public debt has tripled over the last fifteen years, as well as the necessary consequences of that increase, and the likelihood and potential impacts of another economic correction during the 2020s. It also considers the failure of America’s political class to control and manage America’s financial affairs.

A fascinating and invaluable book for anyone interested in the monetary and economic realities driving our politics, markets, and societies, this latest edition of Inflated is an eye-opening discussion of the drastic changes that characterize the modern American economy—as well as the even more dramatic transformations that may lie just beyond the horizon.

PRAISE FOR INFLATED

“Who says that the sequel never stacks up with the original? The new edition of Inflated brings Christopher Whalen’s marvelously accessible history of American finance right down to the present day. Securities analyst, central banker, investor, deal-doer and author, Whalen is no mere recounter of the past but also an informed and provocative critic of the present. His ideas about the future will likely save his readers some large multiple of the price of his book.”
—JAMES GRANT, Founder and Editor, Grant’s Interest Rate Observer

“A gripping biography of American finance. Whalen chronicles credit as a main character in the United States’ journey from colonial outpost to economic superpower. An erudite and engrossing work of monetary history that illuminates the recurring patterns of boom and bust, Inflated belongs on the bookshelves of those who seek to understand the volatile financial landscape of the 2020s and beyond.”
—JACK FARLEY, Host of the Monetary Matters podcast

“When it comes to institutional structures, we can only know where we are by knowing where we have been. Chris Whalen builds our understanding of the American financial system as he leads us on the journey from the newly independent American republic creating its first banks to the 21st century, passing through fevered monetary debates, schemes, panics, bailouts and the great financial turning points of the Civil War, the First World War and the Depression, supplying pointed observations along the way. Two of my favorites: ‘The American Dream of instant wealth via opportunism and speculation,’ and ‘We pass laws that promise our people price stability but pursue policies and practices that require steady inflation.’ I found this lively history and commentary on the eternal interaction of politics and finance both very instructive and enjoyable.”
—ALEX J. POLLOCK, Senior Fellow, Mises Institute, and Author of Finance and Philosophy and Surprised Again!