The Alchemists: Three Central Bankers and a World on Fire

http://www.capitalspectator.com/archives/2013/04/book_bits_4613.html

David Warsh thought highly of this book:

He wrote: "Irwin started covering the Federal Reserve beat for the Post in August 2007. So his book has the virtue of a fresh eye. You go along with him as he learns. The advent of central banking in seventeenth-century Sweden gets a chapter (a somewhat confusing one, in which Jimmy Stewart, from It’s a Wonderful Life, makes a guest appearance to explain fractional banking). A second chapter recalls the history of the Bank of England and Walter Bagehot’s classic work on money markets, Lombard Street. A third chapter describes the events leading up to the founding of the Fed in 1913; a fourth, the Weimar inflation of the 1920s and US and European central bankers’ failures in the early 1930s; a fifth, the post-World War II inflation and Paul Volcker’s role in ending it; a sixth, the birth of the European Monetary Union; and a seventh, the lost decade of Japan. Then comes a brisk narration of the crisis itself. At that point Irwin has become become comfortable with the story; and the second half of the book, which concerns the aftermath of the American crisis and the European second wave, adds a new and permanent angle to the story: its international dimension. Alchemy is a lousy metaphor for what central bankers do; but Irwin is a very capable reporter and the mostly successful collaboration among Fed chairman Ben Bernanke, Bank of England Governor Mervyn King and European Central Bank President Jean Claude Trichet is an important part of the story."

● The Alchemists: Three Central Bankers and a World on Fire By Neil Irwin

Q&A with author via The New York Times/Economix blog

Q: Americans generally view the financial crisis as a domestic event, and it’s already fading from memory. A central message of your book seems to be that it was primarily a European event, and it’s not over yet. A: If history teaches one thing, it is that when a severe global financial panic sets in, it can easily bend and warp and metastasize. That’s how what we once quaintly called the subprime crisis came to have such varied effects as banking collapses in Iceland and Ireland and Cyprus, a lost decade for the British economy, and a series of events that nearly unraveled 60 years of progress toward a united and peaceful Europe. At its worst, those types of unpredictable domino effects can lead to some very bad places, of which the Great Depression and World War II are the prime examples. Fortunately nothing nearly that bad has happened this time. But as catastrophic as the 2008 experience was for the U.S. economy and millions of Americans, it was closer to the start of the crisis than the end.