[Review] Danielle DiMartino Booth: 'Fed Up'

John Maynard Keynes (1883-1946) became one of the most influential economists who built on (and greatly refined) earlier work on the causes of business cycles. Known as Keynesian economics, his insights are still adhered to by influential policymakers.

The American Federal Reserve of FED was formed in 1913 after a series of financial crises that led to the desire for central control of the monetary system in order to create some sort of cushion to avert or dampen future financial crises.

Keynes was shaped by the Great Depression in the 1930s. But, as anyone with a bit of a working brain can see, the world has changed since then. Computers and the internet have had an enormous effect on the way countries, corporations, banks, and people do business. Trillions of dollars are sloshing between continents at the mere click of 'Enter'.

So, you would expect that the governors of the FED would be steeped in modern economics, had previous experience in banking, or had led a corporation. That is sadly not the case, almost all governors are academics and they still adhere to the now largely archaic Keynesian economics.

Danielle DiMartino Booth had been an analyst on Wall Street, had had a brief stint at a regional Fed and became a preferred researcher to Richard Fisher, governor of the Dallas Fed. The book is a chronology of her experiences leading up to and during the financial crisis. What DiMartino Booth describes in 'Fed Up: An insiders take on why the Federal Reserve is bad for America' is best described as a collision of supertankers. Inept and out of touch with reality, governors of the FED continued to make decisions based on faulty premisses.

A succession of Keynesians, Alan Greenspan (1987-2006), Ben Bernanke (2006-2014), Janet Yellen (2014-2018), and Jerome Powell (2018-2023), tried to counter each and every crisis with the idea that the use of fiscal and monetary policies to mitigate the adverse effects of economic downturns. When those policies had little or no effect, panic set in and money was simply and magically created out of thin air. Zero Interest Rates resulted in asset bubbles penalized savers and insurance companies.

There never was an exit plan, never an idea on how to recoup that money, no grasp of what effect their policies would have on America's middle class. Yes, the rich became even richer, but millions of regular Americans faced financial ruin.

Has the Fed learned from its mistakes? No. Has the newly elected president Joe Biden learned from previous mistakes? No. He elected Janet Yellen as Secretary of the Treasury. 

An even better question is: Why has the US turned into a gerontocracy? We all know that men and women of advanced age often suffer from dementia and have ossified brains.

The conclusion must be that the book is a chronicle of chronic ineptitude and tunnel vision.

'Fed Up: An insiders take on why the Federal Reserve is bad for America' is a book everybody should read as a depressing warning from the past and a harrowing vision of the future. Because, as the US is in effect ruled by a gerontocracy, all thinking is ossified and nothing will change.

Buy the book here.