Inside the Fed

Stephen Axilrod is the ultimate Federal Reserve insider. He worked at the
Fed's Board of Governors for over thirty years and after that in private markets and
as a consultant on monetary policy. With Inside the Fed, he offers his unique
perspective on the inner workings of the Federal Reserve System during the last
fifty years -- writing about personalities as much as policy -- based on his
knowledge and observations of every Fed chairman since 1951.Axilrod's discussion
focuses on how the personalities of the various chairmen affected their capacity for
leadership. He describes, for example, Arthur Burns's response to political pressure
from the Nixon White House and Paul Volcker's radical shift to an anti-inflationary
policy at the end of the 1970s -- a transition in which Axilrod himself played a
crucial role. As for the Greenspan years, Axilrod points to the unintended effects
of the Fed's newfound "garrulousness" (the plethora of announcements and hints about
policy intentions) -- one of which was the Fed's loss of credibility in the
aftermath of the chairman's 1996 comment about "irrational exuberance." And Axilrod
incisively outlines the problems -- including the subprime mess -- inherited from
Greenspan by the current chairman, Ben Bernanke. Great leadership in monetary
policy, Axilrod says, is determined not by pure economic sophistication but by the
ability to push through political and social barriers to achieve a paradigm shift in
policy -- and by the courage and bureaucratic moxie to pull it off.