ISBN-10:
0691143986
ISBN-13:
9780691143989
Pub. Date:
11/28/2010
Publisher:
Princeton University Press
The New Lombard Street: How the Fed Became the Dealer of Last Resort

The New Lombard Street: How the Fed Became the Dealer of Last Resort

by Perry Mehrling
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Product Details

ISBN-13: 9780691143989
Publisher: Princeton University Press
Publication date: 11/28/2010
Pages: 192
Sales rank: 1,292,767
Product dimensions: 5.60(w) x 8.50(h) x 0.90(d)

About the Author


Perry Mehrling is professor of economics at Barnard College, Columbia University. He is the author of Fischer Black and the Revolutionary Idea of Finance and The Money Interest and the Public Interest: American Monetary Thought, 1920-1970.

Table of Contents

Acknowledgments xi

Introduction 1 A Money View Perspective 2

Lessons from the Crisis 6





Chapter One: Lombard Street, Old and New 11

The Inherent Instability of Credit 12

The Old Lombard Street 18

The New Lombard Street 23





Chapter Two: Origins of the Present System 30

From National Banking to the Fed 30

From War Finance to Catastrophe 37

Noncommercial Credit in Depression and War 43





Chapter Three: The Age of Management 48

Monetary Policy and the Employment Act 52

Listening to the Academics 57

Monetary Walrasianism 60

A Dissenting View 65





Chapter Four: The Art of the Swap 71

Currency Swaps and the UIP Norm 72

Brave New World 79

From Modern Finance to Modern Macroeconomics 85





Chapter Five: What Do Dealers Do? 92

Inside the Money Market 93

Funding Liquidity and Market Liquidity 98

Anatomy of a Crisis 103

Monetary Policy 107





Chapter Six: Learning from the Crisis 113

The Long Shadow of Jimmy Stewart 116

A Stress Test of Moulton-Martin 123

Dealer of Last Resort 132





Conclusion 136

Notes 141

References 149

Index 159


What People are Saying About This

Backhouse

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

David Laidler

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

Galbraith

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"

Goodhart

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

Simon Johnson

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"

E. Goodhart

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

Friedman

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"

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