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The new Lombard Street [electronic resource] : how the Fed became the dealer of last resort /
Perry Mehrling.
imprint
Princeton, N.J. : Princeton University Press, c2011.
description
xii, 174 p. : ill. ; 23 cm.
ISBN
0691143986 (hbk. : alk. paper), 9780691143989 (hbk. : alk. paper)
format(s)
Book
More Details
imprint
Princeton, N.J. : Princeton University Press, c2011.
isbn
0691143986 (hbk. : alk. paper)
9780691143989 (hbk. : alk. paper)
restrictions
Licensed for access by U. of T. users.
catalogue key
8844098
 
Includes bibliographical references (p. [149]-157) and index.
A Look Inside
Excerpts
Flap Copy
"The global financial system is badly broken. Many institutions and individuals share responsibility for the development of pathologies in and around our largest banks, but the buck stops, literally and figuratively, with the Federal Reserve. If you would like to understand how this happened--and how we (and the Fed) might inch back from the precipice--read this book."-- Simon Johnson, coauthor of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown "Informed by history, a model of clear thought and lucid prose, The New Lombard Street is by far our best guidebook to the changed structure of financial markets and the new role of the Federal Reserve. It also charts a new path for monetary policymakers and--given the scale of the crisis--not a minute too soon."-- James K. Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too "In Lombard Street , Walter Bagehot laid out the financial market lore and central banking wisdom of his day--the 1870s. Todays markets are different, and so is what constitutes useful policy. In The New Lombard Street , Perry Mehrling blends his rich historical knowledge with an acute analysis of current-day markets to suggest what constitutes sound central banking and financial regulation for our time. The result merits close attention from policymakers, and the rest of us too."-- Benjamin M. Friedman, author of The Moral Consequences of Economic Growth "No one else has come close to the achievement of this book in relating the crisis to the prior history of monetary thought and central bank practice. A masterful, original, and beautifully constructed work."-- Charles A. E. Goodhart, London School of Economics and Political Science " The New Lombard Street makes a serious and successful effort to deepen our understanding not just of the last century or more of U.S. monetary history, but also of the way in which economic analysis has evolved alongside that history. I very much enjoyed reading this book. It is timely, provocative, and well written."-- David Laidler, professor emeritus, University of Western Ontario "This is a wonderful book that offers a fresh understanding of the role of the central bank in the world of modern finance."-- Roger E. Backhouse, University of Birmingham
Flap Copy
"The global financial system is badly broken. Many institutions and individuals share responsibility for the development of pathologies in and around our largest banks, but the buck stops, literally and figuratively, with the Federal Reserve. If you would like to understand how this happened--and how we (and the Fed) might inch back from the precipice--read this book."--Simon Johnson, coauthor of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown "Informed by history, a model of clear thought and lucid prose, The New Lombard Street is by far our best guidebook to the changed structure of financial markets and the new role of the Federal Reserve. It also charts a new path for monetary policymakers and--given the scale of the crisis--not a minute too soon."--James K. Galbraith, author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too "In Lombard Street , Walter Bagehot laid out the financial market lore and central banking wisdom of his day--the 1870s. Today's markets are different, and so is what constitutes useful policy. In The New Lombard Street , Perry Mehrling blends his rich historical knowledge with an acute analysis of current-day markets to suggest what constitutes sound central banking and financial regulation for our time. The result merits close attention from policymakers, and the rest of us too."--Benjamin M. Friedman, author of The Moral Consequences of Economic Growth "No one else has come close to the achievement of this book in relating the crisis to the prior history of monetary thought and central bank practice. A masterful, original, and beautifully constructed work."--Charles A. E. Goodhart, London School of Economics and Political Science " The New Lombard Street makes a serious and successful effort to deepen our understanding not just of the last century or more of U.S. monetary history, but also of the way in which economic analysis has evolved alongside that history. I very much enjoyed reading this book. It is timely, provocative, and well written."--David Laidler, professor emeritus, University of Western Ontario "This is a wonderful book that offers a fresh understanding of the role of the central bank in the world of modern finance."--Roger E. Backhouse, University of Birmingham
Flap Copy
"The global financial system is badly broken. Many institutions and individuals share responsibility for the development of pathologies in and around our largest banks, but the buck stops, literally and figuratively, with the Federal Reserve. If you would like to understand how this happened--and how we (and the Fed) might inch back from the precipice--read this book."--Simon Johnson, coauthor of13 Bankers: The Wall Street Takeover and the Next Financial Meltdown"Informed by history, a model of clear thought and lucid prose,The New Lombard Streetis by far our best guidebook to the changed structure of financial markets and the new role of the Federal Reserve. It also charts a new path for monetary policymakers and--given the scale of the crisis--not a minute too soon."--James K. Galbraith, author ofThe Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too"InLombard Street, Walter Bagehot laid out the financial market lore and central banking wisdom of his day--the 1870s. Today's markets are different, and so is what constitutes useful policy. InThe New Lombard Street, Perry Mehrling blends his rich historical knowledge with an acute analysis of current-day markets to suggest what constitutes sound central banking and financial regulation for our time. The result merits close attention from policymakers, and the rest of us too."--Benjamin M. Friedman, author ofThe Moral Consequences of Economic Growth"No one else has come close to the achievement of this book in relating the crisis to the prior history of monetary thought and central bank practice. A masterful, original, and beautifully constructed work."--Charles A. E. Goodhart, London School of Economics and Political Science"The New Lombard Streetmakes a serious and successful effort to deepen our understanding not just of the last century or more of U.S. monetary history, but also of the way in which economic analysis has evolved alongside that history. I very much enjoyed reading this book. It is timely, provocative, and well written."--David Laidler, professor emeritus, University of Western Ontario"This is a wonderful book that offers a fresh understanding of the role of the central bank in the world of modern finance."--Roger E. Backhouse, University of Birmingham
Full Text Reviews
Appeared in Library Journal on 2010-10-01:
Mehrling (economics, Barnard Coll.) analyzes the recent financial crisis, focusing specifically on the role of the Federal Reserve. "Lombard Street" in the title is a reference to an 1873 work in which Walter Bagehot, an early editor of the Economist, theorizes that the central bank must act as a "lender of last resort" by creating a safety net for private banks. Mehrling expands upon Bagehot's analysis to conclude that the central bank must also act as a "dealer of last resort," stepping in to assist the private securities market when it fails to function properly. The distinction relies heavily upon complex macroeconomic and finance theories, making the book's finer points inaccessible to those without a strong foundation in economics or finance. VERDICT Readers who are not well versed in these areas and seek to deepen their understanding of the financial crisis would be better served by Joseph E. Stiglitz's Freefall: America, Free Markets, and the Sinking of the World Economy. Mehrling's book is recommended only for readers in graduate business or economics programs.-Jennifer Michaelson, Cleveland (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
Appeared in Choice on 2011-06-01:
In the recent financial crisis and its aftermath, the only thing that has expanded faster than the Federal Reserve's balance sheet is the number of books on what happened, why, and whether the crisis could have been averted. As this title promises, Mehrling (Barnard College) begins with principles for central banking set down in 1873's Lombard Street by Walter Bagehot, and he reexamines them in the context of a new global system transformed by financial engineering. In a cogent summary of monetary macroeconomic thought, he explains how the overshadowing of the "money view" contributed to the crisis along with the linking of "shiftability" and liquidity. Mehrling argues compellingly for an acknowledgment that the Federal Reserve in its actions in response to the crisis has taken on the role of a "dealer of last resort," for which "the goal is guaranteeing shiftability," not indemnifying for losses of wealth. He makes the case for a return to the "classic money view" in which central bankers should focus on the balance between "discipline and elasticity in the money market." A well-written, scholarly dissection that should be required reading for all graduate courses (and perhaps some advanced undergraduate) in macroeconomics or monetary economics. Summing Up: Highly recommended. Academic collections, upper-division undergraduate and up. M. H. Lesser lona College
Reviews
Review Quotes
[A] fantastic book.
[A] fantastic book. -- Brad DeLong blog
"[A] fantastic book."-- Rortybomb, Mike Konczal blog
[A] fantastic book. -- Rortybomb, Mike Konczal blog
A well-written, scholarly dissection that should be required reading for all graduate courses (and perhaps some advanced undergraduate) in macroeconomics or monetary economics.
"A well-written, scholarly dissection that should be required reading for all graduate courses (and perhaps some advanced undergraduate) in macroeconomics or monetary economics."-- Choice
A well-written, scholarly dissection that should be required reading for all graduate courses (and perhaps some advanced undergraduate) in macroeconomics or monetary economics. -- Choice
I continue to ponder Mehrling's main claims, but in any case this is an important book about the new Fed.
"I continue to ponder Mehrling's main claims, but in any case this is an important book about the new Fed."-- Tyler Cowen, Marginal Revolution
I continue to ponder Mehrling's main claims, but in any case this is an important book about the new Fed. -- Tyler Cowen, Marginal Revolution
[I]mportant. . . . Mehrling's new book tries to do just what Bagehot did: to give an account both of how and why the Fed acted when it reinvented the rules in the middle of a financial crisis, and of what the implications for future monetary policy will be.
"[I]mportant. . . . Mehrling's new book tries to do just what Bagehot did: to give an account both of how and why the Fed acted when it reinvented the rules in the middle of a financial crisis, and of what the implications for future monetary policy will be."-- Harold James, Central Banking Journal
[I]mportant. . . . Mehrling's new book tries to do just what Bagehot did: to give an account both of how and why the Fed acted when it reinvented the rules in the middle of a financial crisis, and of what the implications for future monetary policy will be. -- Harold James, Central Banking Journal
In The New Lombard Street , Perry Mehrling . . . provides a lucid account of how the system worked when it was working--and of the growing role assumed by the Fed in an era of global economic volatility and 'credit-fueled bubbles.'
"In The New Lombard Street , Perry Mehrling . . . provides a lucid account of how the system worked when it was working--and of the growing role assumed by the Fed in an era of global economic volatility and 'credit-fueled bubbles.'"-- Glenn C. Altschuler, Tulsa World
In The New Lombard Street , Perry Mehrling . . . provides a lucid account of how the system worked when it was working--and of the growing role assumed by the Fed in an era of global economic volatility and 'credit-fueled bubbles.' -- Glenn C. Altschuler, Tulsa World
This is an excellent and accessible analysis for anyone wishing to understand the origins of the financial crisis and how the Fed came to respond as it did.
"This is an excellent and accessible analysis for anyone wishing to understand the origins of the financial crisis and how the Fed came to respond as it did."-- Larry Hatheway, Business Economist
With lucid precision, Mehrling traces the history of how Fed policy makers became biased toward 'excessive elasticity'. . . . Mehrling saves the best for the end, where he describes the Fed's battle to save the system with an alphabet soup of lending programs.
"With lucid precision, Mehrling traces the history of how Fed policy makers became biased toward 'excessive elasticity'. . . . Mehrling saves the best for the end, where he describes the Fed's battle to save the system with an alphabet soup of lending programs."-- James Pressley, Bloomberg News
With lucid precision, Mehrling traces the history of how Fed policy makers became biased toward 'excessive elasticity'. . . . Mehrling saves the best for the end, where he describes the Fed's battle to save the system with an alphabet soup of lending programs. -- James Pressley, Bloomberg News
InLombard Street, Walter Bagehot laid out the financial market lore and central banking wisdom of his day--the 1870s. Today's markets are different, and so is what constitutes useful policy. InThe New Lombard Street, Perry Mehrling blends his rich historical knowledge with an acute analysis of current-day markets to suggest what constitutes sound central banking and financial regulation for our time. The result merits close attention from policymakers, and the rest of us too.
No one else has come close to the achievement of this book in relating the crisis to the prior history of monetary thought and central bank practice. A masterful, original, and beautifully constructed work.
The global financial system is badly broken. Many institutions and individuals share responsibility for the development of pathologies in and around our largest banks, but the buck stops, literally and figuratively, with the Federal Reserve. If you would like to understand how this happened--and how we (and the Fed) might inch back from the precipice--read this book.
The New Lombard Streetmakes a serious and successful effort to deepen our understanding not just of the last century or more of U.S. monetary history, but also of the way in which economic analysis has evolved alongside that history. I very much enjoyed reading this book. It is timely, provocative, and well written.
This is a wonderful book that offers a fresh understanding of the role of the central bank in the world of modern finance.
This item was reviewed in:
Library Journal, October 2010
Choice, June 2011
To find out how to look for other reviews, please see our guides to finding book reviews in the Sciences or Social Sciences and Humanities.
Summaries
Bowker Data Service Summary
'The New Lombard Street' presents the innovative principles needed to address the instability of the markets and to rebuild our financial system. The book traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913.
Main Description
Walter Bagehot's Lombard Street , published in 1873 in the wake of a devastating London bank collapse, explained in clear and straightforward terms why central banks must serve as the lender of last resort to ensure liquidity in a faltering credit system. Bagehot's book set down the principles that helped define the role of modern central banks, particularly in times of crisis--but the recent global financial meltdown has posed unforeseen challenges. The New Lombard Street lays out the innovative principles needed to address the instability of today's markets and to rebuild our financial system. Revealing how we arrived at the current crisis, Perry Mehrling traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913. He explains how the Fed took classic central banking wisdom from Britain and Europe and adapted it to America's unique and considerably more volatile financial conditions. Mehrling demonstrates how the Fed increasingly found itself serving as the dealer of last resort to ensure the liquidity of securities markets--most dramatically amid the recent financial crisis. Now, as fallout from the crisis forces the Fed to adapt in unprecedented ways, new principles are needed to guide it. In The New Lombard Street , Mehrling persuasively argues for a return to the classic central bankers' "money view," which looks to the money market to assess risk and restore faith in our financial system.
Main Description
Walter Bagehot'sLombard Street, published in 1873 in the wake of a devastating London bank collapse, explained in clear and straightforward terms why central banks must serve as the lender of last resort to ensure liquidity in a faltering credit system. Bagehot's book set down the principles that helped define the role of modern central banks, particularly in times of crisis--but the recent global financial meltdown has posed unforeseen challenges.The New Lombard Streetlays out the innovative principles needed to address the instability of today's markets and to rebuild our financial system.Revealing how we arrived at the current crisis, Perry Mehrling traces the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913. He explains how the Fed took classic central banking wisdom from Britain and Europe and adapted it to America's unique and considerably more volatile financial conditions. Mehrling demonstrates how the Fed increasingly found itself serving as the dealer of last resort to ensure the liquidity of securities markets--most dramatically amid the recent financial crisis. Now, as fallout from the crisis forces the Fed to adapt in unprecedented ways, new principles are needed to guide it. InThe New Lombard Street, Mehrling persuasively argues for a return to the classic central bankers' "money view," which looks to the money market to assess risk and restore faith in our financial system.
Table of Contents
Acknowledgmentsp. xi
Introductionp. 1
A Money View Perspectivep. 2
Lessons from the Crisisp. 6
Lombard Street, Old and Newp. 11
The Inherent Instability of Creditp. 12
The Old Lombard Streetp. 18
The New Lombard Streetp. 23
Origins of the Present Systemp. 30
From National Banking to the Fedp. 30
From War Finance to Catastrophep. 37
Noncommercial Credit in Depression and Warp. 43
The Age of Managementp. 48
Monetary Policy and the Employment Actp. 52
Listening to the Academicsp. 57
Monetary Walrasianismp. 60
A Dissenting Viewp. 65
The Art of the Swapp. 71
Currency Swaps and the UIP Normp. 72
Brave New Worldp. 79
From Modern Finance to Modern Macroeconomicsp. 85
What Do Dealers Do?p. 92
Inside the Money Marketp. 93
Funding Liquidity and Market Liquidityp. 98
Anatomy of a Crisisp. 103
Monetary Policyp. 107
Learning from the Crisisp. 113
The Long Shadow of Jimmy Stewartp. 116
A Stress Test of Moulton-Martinp. 123
Dealer of Last Resortp. 132
Conclusionp. 136
Notesp. 141
Referencesp. 149
Indexp. 159
Table of Contents provided by Ingram. All Rights Reserved.

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