Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic---and Prevented Economic Disaster

Product Information

Readers should know that I read these books as an insider. I covered the Fed in the Alan Greenspan and Ben Bernanke years for the Wall Street Journal and wrote a book about the Fed’s role in the global financial crisis. In my current job as director of the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy, I talk frequently to both Smialek and Timiraos. I read and commented on Timiraos’s manuscript. Smialek’s book opens with an unnamed interviewer asking Powell on a webcast in the early weeks of the pandemic how much support the Fed could provide during the emergency. (“There’s no limit on how much of that we can do,” Powell said.) The interviewer was me. Ellen Meade was on the official staff of the Fed’s Division of Monetary Affairs from 2011 to September 2011 and was Special Adviser to Vice Chair Richard Clarida from October 2018 through December 2020. The inside story, told with “insight, perspective, and stellar reporting,” of how an unassuming civil servant created trillions of dollars from thin air, combatted a public health crisis, and saved the American economy from a second Great Depression (Alan S. Blinder, former Vice Chair of the Federal Reserve). Smialek has a great time contrasting Quarles’s free-market, small-government views to those of one of his heroes—and his wife’s great-uncle—President Franklin D. Roosevelt’s Fed chair, Marriner Eccles, who she says was a Keynesian before the word was invented. (Eccles, though, as she recounts, later played a key role in establishing the Fed’s independence from the White House.) Smialek describes Quarles as “an unusually colorful character for a Fed official,” though the only evidence she offers is his habit of peppering speeches with phrases such as “kaleidoscopic gallimaufry.” Timiraos dwells mainly on Quarles’s role in fashioning the Fed’s response to the pandemic. Smialek writes a bit more about his role—newly relevant in light of this year’s banking crisis—in loosening some of the regulatory strings imposed on banks after the global financial crisis with Powell’s support and over Brainard’s strenuous objections. This is all to say that hero-worshiping Jay Powell is a worthless exercise in my opinion, and the book would've been stronger if it kept a more balanced view of all the decisionmakers at play, and delved more into analyses of Main Street if Timiraos cares so much about how the Fed influences Main Street.

This is a riveting story of policy making in crisis and an illuminating examination of how drastically the Fed’s role in the economy has changed.” Jerome Powell never expected to become the world’s most powerful economic policymaker. A lawyer by training, not an economist, he was named to the U.S. Federal Reserve Board of Governors in 2012 because he had impressed Treasury Secretary Timothy Geithner in helping to cajole congressional Republicans to raise the debt ceiling, and the Obama administration decided to pair a Republican (Powell) with a Democrat (Jeremy Stein) to get two board nominees through the Senate. Powell would likely have been content to cap his career as vice chair of the Fed board in Washington or as president of the New York Fed, the most prominent of the Fed’s 12 regional banks. But in 2017, then-President Donald Trump had other ideas. Reluctant to reappoint Janet Yellen, a Democrat, to a second four-year term as Fed chair, he took the recommendation of his Treasury secretary, Steven Mnuchin, and chose Powell for the job. So, what do we learn about Powell, who must be reminded of the giants who preceded him every time he walks by the portraits of former Fed chairs that hang in the corridor outside his office? When the Obama administration was considering Powell for the Fed board, Smialek reports, a memo to the president read, “Perhaps the biggest downside of Powell is that he would bring less thought leadership and creativity … than some other candidates might. Nevertheless, he brings many other strengths.” After he got to the Fed, according to Timiraos, he groused that the Fed’s Ph.D. economists talked to him as if he were “a golden retriever.” The inside story, told with“ insight, perspective, and stellar reporting,” of how an unassuming civil servant created trillions of dollars from thin air, combatteda public health crisis, and saved the American economy from a second Great Depression (Alan S. Blinder,former Vice Chair of the Federal Reserve). Smialek seeks to distinguish herself from “many people who write about the Fed” and “suggest that its officials have saved the world” or “that they have ruined the world.”

Confirm your username to get started.

The first of (what will inevitably be) many play-by-play narratives about the Covid economic policy response. Recommended.

History has a way of moving on, and just two years later it is difficult to recall how seriously America flirted with a depression in the spring of 2020.The book’s strength lies in its detailed original reporting and the fast-paced narrative of the harrowing month that ... the coronavirus was taking off in 2020." This is a riveting story of policy making in crisis and an illuminating examination of how drastically the Fed’s role in the economy has changed.”— Publishers Weekly In times of economic calm, there’s not much grist for book-length behind-the-scenes accounts from Fed beat reporters. But Powell’s tenure has been consequential, weathering the COVID-19 pandemic, tumult in the U.S. Treasury market, threats of firing by Trump, a new spotlight on racial inequality in the U.S. economy, a significant rethinking of the Fed’s monetary policy strategy, Russia’s invasion of Ukraine, the unwelcome return of inflation, and, recently, a banking crisis. And while the Fed has always been a very important actor in the U.S. and international economies—the sub-subtitle of my 2009 book was “How the Federal Reserve Became the Fourth Branch of Government”—the global financial crisis and the pandemic underscored just how it has effectively become the central bank and lender of last resort to the whole world. There is a lot for a couple of journalists to write about.