Former Forbes reporter Solomon believes that the tiny, secretive circle of unelected central bankers who manage the world's money supply and shape key financial policies wields too much power. The central bankers include U.S. Federal Reserve chairman Alan Greenspan, German Bundesbank president Karl Otto Phl and Bank of England governor Eddie George and their compeers in Japan, Switzerland, France, Italy and Canada. In a gripping and disturbing report, Solomon credits central bankers with major accomplishments: beating back inflation in the early 1980s, staving off financial depression during the Third World debt crisis of 1982, checking the near free fall of the dollar, and rescuing shaky banking systems following the 1987 crash of the U.S. stock market. But Solomon is alarmed by central bankers' failure to cope with the rise of ``stateless'' capital, and he stresses that political reforms are needed to democratically regulate this ``floating monetary nonsystem'' driven by investors' whims or manias. Through some 300 interviews with bankers, finance ministers, politicians and investors, Solomon has pierced the tight-lipped, shadowy world of central banking in a dramatic expos. (June)
Solomon, an economics journalist, puts forth two interconnected themes in this work: central bankers' increasingly important role in the trillion dollar- per-day international monetary arena and the preliminaries and consequences of the great stock market crash around the world during October 1987. The crash itself, he says, was rooted in the "new" money-which is variously described as stateless, volatile, mobile, "hot," and global. Computer and telecommunications technologies intensified its "profit-expansive logic" and speed. After the collapse of the Bretton Woods system in 1971, central bankers had to step into the vacuum created by floating exchange rates and flat money to try to maintain some international monetary and financial stability (for this, Volcker and Greenspan get good grades). This book is topical, considering today's strong similarities to that era, but it demands more than rudimentary financial sophistication. Business collections could consider this.-Alex Wenner, Indiana Univ. Libs., Bloomington
Former "Forbes" staff reporter Solomon accomplishes a rather remarkable feat in his analysis (the title is deliberately ambiguous) of the increasingly prominent role of central banks in the world economy over the past two decades. Solomon's narratives of crises and near-crises, including inflation in the early 1980s, overvaluation of the "superdollar," the 1987 stock market crash, and the hammering-out of global standards for bank capital, demonstrate the impact of volatile, highly speculative "stateless money" in expanding the responsibilities, and thus the powers, of central bankers. Solomon gives the industrial nations' "international freemasons" high grades for harmonizing the sometimes conflicting demands of capitalism and democracy and for coping intelligently with unprecedented challenges. But he also insists that the "fates of all democratic nations are dependent upon how well we can collectively civilize stateless money within a new international compact of world monetary rules, norms, and policy actions." The 1995 Barings Bank collapse and the drop in the dollar's value against various foreign currencies only reinforce the urgency of Solomon's pointed warning.