America's Money Machine: The Story of the Federal Reserve
The Story of the Federal Reserve
Elgin Groseclose, an eminent monetary economist in the 20th-century, rips the roof off the Federal Reserve in this wonderful history that takes us from the Fed's founding to the 1960s. He shows that the gap between the promise and the reality is shockingly massive, so much so that the Federal Reserve must be considered one of the greatest failures in the history of public policy.
Grosecloses's treatise on the subject contains research unavailable anywhere else. He was meticulous, having spent many years culling through the archives of every institution and person involved with Fed decision making. In case after case, he chronicles the policy failure, and the relentless decline in money's quality from the Fed's inception and forward.
Groseclose is a case of a major figure in 20th century economic thought who has been unjustly forgotten. After his PhD (American University) he taught at the City College of New York and became the first financial editor of Fortune and served as a financial consultant to Iran, helping to restore a gold standard after the war and controlling inflation. For many years, he ran his own institute, which permitted him time to do the extraordinary research you find in this book.
As just one example, the opening chapters unearth an editorial from the New York Times, which denounces the idea of the Fed as an example of the "shallow sophistries of (Theodore) Roosevelt Socialism," and further said that the American people are too intelligent and have too much common sense to put up with a central bank like the Fed. So not only was there opposition to the Fed, it had a voice and its predictions of a coming calamity turned out to be right on.
He shows that at no time in its history has the Fed actually achieved what it promised: low inflation, economic stability, stable growth, reliable regulation of the banking system. Groseclose goes further to show that the Fed has generated unrelenting cycles and inflation and been the major fuel for the growth of government -- politicizing the whole of American economic life.
It is a great pleasure for the Mises Institute to be able to bring back this book, which contains singular research and will provide outstanding source material for a new generation of anti-Fed activists.
As a side benefit, the cover art of this book—though you can't see it in this photo—is actually built by thousands of tiny paper dollars.
PART I The Roots of Reform
1. The Quality of the Times 3
2. The First Shock Wave IO
3. The Lapping at the Dikes I6
4. The Rich Man's Panic 22
5. A Measure of Expediency 3 I
6. The Aldrich-Vreeland Bill 43
7. An Interlude for Debate 46
8. The Great Investigation 53
9. The Setting of the Current 6I
10. The Bill Considered 67
PART II The Great Reversal
I 1. Advent of Storm 8I
12. The First Inundation 87
13. Collapse of a Theory 93
14. The Path of Retreat IOO
15. When to Reef Sail Io8
16. The Wounds of War II8
17. Wading in the Big Pond I27
18. The Lapping Waves of Crisis I35
19. The Fulcrum and the Lever I43
20. The Gushing Fountain I5I
PART III Debacle of an Idea
2 1. The Crumbling of the Dikes I57
22. The New Thermopylae I63
23. The Keynesian Influence I70
24. The Not So New New Deal I79
25. The New Deal and the Federal Reserve I85
26. New Bridles for Old I95
27. Where Two Tides Meet 205
28. The Reversals of War 2I2
29. Doubtful Victory 2I9
30. The Role of Atlas 227
31. The Not So Golden Years 235
32. The End of a Dream 240
33. The Chute 247
34. Into the Pit 252
35. Out of the Pit 259
Selected Bibliography 275
About the Author 279