Although the Fed is a fascinating topic and there are great stories to be told, Morton Mayer isnít the best story teller for the naive and uninformed. The Fed is not easy going if you have a strong background in finance; itís inexplicable if you are a complete amateur.
To make matters worse, the author rambles and digresses, leaving the reader to read and reread in order to make sense of long passages. For example, during a discussion of how John Snyder, Trumanís Secretary of the Treasury during the Korean War, reacted to a decision made by the Federal Open Market Committee chaired by Allen Sproul, Mayer characterizes Snyder as a poker-playing buddy of Trumanís and a "total lightweight." In a half page footnote, the reader learns that the author knew Snyder. He then relates an amusing story of a telephone conversation between Snyder and Truman about Joe and John Kennedy which took place almost ten years later. By the time youíve read all of that, you have to go back and reread the first part of the passage about the conflict between Sproul and Snyder in 1951 in order to understand the succeeding paragraphs.
One of the most interesting chapters is titled "Greenspan and the Markets." Mayer declares Allan Greenspan "a good guy" -- an eminently pragmatic man whose political philosophy is "whatever is, is right." He describes Greenspanís less than warm relationships with James Baker of the Reagan Administration and Nicholas Brady, George Bush Sr.'s Treasury Secretary. The move to Clintonís Democratic administration improved relations between the Fed and the Treasury, despite the fact that Greenspan is a Republican. Clinton, recognizing the value of cooperation, cultivated Greenspan. His Treasury secretaries -- Lloyd Bentsen, a veteran of many years on the Senate Finance Committee, and Robert Rubin, a managing partner of Goldman Sachs who knew many of the CEOís of the companies where Greenspan served on the boards -- worked with Greenspan to bury the traditional hatchet between the two groups. This new spirit of understanding and support along with a lot of luck led to the longest economic expansion in the history of the United States.
In reviewing the history of Greenspanís tenure, Mayer gives several examples where analysts (including Mayer in his own columns) were enraged by Greenspanís approach to problem solving. To paraphrase, where the analysts were right in principle, Greenspan turned out to be right in practice.
In a charming passage in the beginning of a chapter entitled "The Fed in Our Future," Mayer quotes David Frost, the chief of staff in the Fed during the 1990s: ďWhat I know is that the country feels better when it thinks well of the Federal Reserve.Ē Mayer comments on the obvious rub here. The country thinks well of the Fed when things are going well. It doesnít follow that things are going well because people have warm, fuzzy feelings about the Fed.
Mayer does have his moments. A financial journalist with thirty books to his credit, he relates with some authority how the Fed works and has some amusing insights into how it doesnít work. He knows the players, the game and the rulebook. He has a good handle on the bats and balls, too.