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Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis
ISBN: 978-0-8179-4971-6 Pub Date: February 26, 2009 Product Format: Cloth Availability: In stock. Price: $14.95 AN EMPIRICAL ANALYSIS OF WHAT WENT WRONG
Throughout history, financial crises have always been caused by excesses—frequently monetary excesses—which lead to a boom and an inevitable bust. In our current crisis it was a housing boom and bust that in turn led to financial turmoil in the United States and other countries. How did everything deteriorate so suddenly and dramatically? In Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis, Hoover fellow and Stanford economist John B. Taylor offers empirical research to explain what caused the current financial crisis, what prolonged it, and what worsened it dramatically more than a year after it began. The author tells how unusually easy monetary policy helped set the crisis in motion, as interest rates at the Federal Reserve and several other central banks deviated from historical regularities. He explains monetary interaction with the subprime mortgage problem, showing how the use of these mortgages, especially the adjustable-rate variety, led to excessive risk taking. In the United States this was encouraged by government programs designed to promote home ownership, a worthwhile goal but overdone in retrospect. Looking ahead, the author suggests a set of principles to follow to prevent misguided actions and interventions in the future. Excerpts from the book can be accessed by clicking on the links below.(Requires Adobe® Reader®. If you do not already have this software installed, click here to download it for free at the Adobe web site.)Copyright © 2009 by John B. Taylor All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission of the publisher.
John B. Taylor is the Bowen H. and Janice Arthur McCoy Senior Fellow at the Hoover Institution and the Mary and Robert Raymond Professor of Economics at Stanford University. ADVANCE PRAISE FOR GETTING OFF TRACK If Milton Friedman and I had written as persuasive an analysis as this, one year—rather than 30 years—after the Great Depression began, the United States might have had a typical recession rather than the greatest downturn in history. Big problems confront us, and responses of immense size are on the table. We desperately need a solid and fact-based analysis so that we get the prescription right. John Taylor provides just that. A must-read for everyone involved. This short volume does a masterful job of tracking the stunning financial market and macroeconomic events of 2007 and 2008, and it provides an organizing framework that will enable the specialist and novice alike to examine these events in a coherent setting. John Taylor is one of the very few who points out the errors that the Federal Reserve made during this difficult period and also shows how they could avoid them. Members of Congress should read this book instead of looking for scapegoats in the wrong places. …cogent, thorough and compelling…Taylor sums up his argument in his subtitle: How Government Actions and Interventions Caused, Prolonged and Worsened the Financial Crisis. Take a moment to absorb that. Although we're told every day that the crisis arose from failures in the free markets—that it represents a crisis of capitalism itself--an eminent economist has now stepped forward to say, in effect, "Nonsense." The markets didn't fail, Taylor argues, the government did. |
