Product Description

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.

Product Details

• Amazon Sales Rank: #44701 in Books
• Published on: 2009-02-25
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 92 pages

Features

• ISBN13: 9780817949716
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.
• Click here to view our Condition Guide and Shipping Prices

Review
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. --George Shultz, former secretary of Treasury, State, and Labor and Budget Director

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.--Allan Meltzer, author of The History of the Federal Reserve

If you want to read a very short book on how we got into the financial crisis, I don't think you could do better than John B. Taylor s Getting Off Track. --Michael Barone, U.S. News & World Report

A sobering book by a Stanford University economist demonstrates not only how the feds caused, misdiagnosed and mishandled the financial crisis, but also how their responses continue to make matters worse. --Robin Goldwyn Blumenthal, Barron's Magazine

A nifty little book --Susan Lee, Forbes.com

This is a very readable book. Taylor takes the complex and sophisticated research he and colleagues have done over the last several years and translates it into language, accompanied by charts, that is easily absorbed. --
John M. Mason, SeekingAlpha.com

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. --Peter Robinson, What Caused the Crisis? Forbes.com

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. --Anna Schwartz, author, with Milton Friedman, of The Great Contraction, 1929–1933

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. --James Poterba, Mitsui Professor of Economics at MIT and President and CEO of the National Bureau of Economic Research

About the Author
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. He has served as the director of the Stanford Institute for Economic Policy Research and was founding director of Stanford's Introductory Economics Center.

Taylor's fields of expertise are monetary policy, fiscal policy, and international economics. He has an active interest in public policy. Taylor is currently a member of the California Governor's Council of Economic Advisors, where he also previously served from 1996 to 1998. In the past, he served as senior economist on President Ford's Council of Economic Advisers in 1976, as a member of President Bush's Council of Economic Advisers from 1989 through 1991, as economic adviser to the Bob Dole presidential campaign in 1996, and as economic adviser to the George W. Bush presidential campaign in 2000. He was also a member of the Congressional Budget Office's Panel of Economic Advisers from 1995 to 2001.

For four years from 2001 to 2005, Taylor served as Undersecretary of Treasury for International Affairs where he was responsible for U.S. policies in international finance, which includes currency markets, trade in financial services, foreign investment, international debt and development, and oversight of the International Monetary Fund and the World Bank. He was also responsible for coordinating financial policy with the G-7 countries, was chair of the working party on international macroeconomics at the OECD, and was a member of the Board of the Overseas Private Investment Corporation.

In 2007, Taylor was awarded the Adam Smith Award from the National Association for Business Economics (NABE) for his work as a groundbreaking researcher, public servant, and teacher during a career of more than 30 years and his outstanding leadership in the field of economics. Taylor was also awarded the Alexander Hamilton Award for his overall leadership in international finance at the U.S. Treasury and the Treasury Distinguished Service Award for designing and implementing the currency reforms in Iraq, and the Medal of the Republic of Uruguay for his work in resolving the 2002 financial crisis. In 2005, The Stanford Institute for Economic Policy Research awarded Taylor with the George P. Shultz Distinguished Public Service Award. Taylor has also won many teaching awards; he was awarded the Hoagland Prize for excellence in undergraduate teaching and the Rhodes Prize for his high teaching ratings in Stanford's introductory economics course. He also received a Guggenheim Fellowship for his research, and he is a fellow of the American Academy of Arts and Sciences and the Econometric Society; he formerly served as vice president of the American Economic Association.

Before joining the Stanford faculty in 1984, Taylor held positions as professor of economics at Princeton University and Columbia University. Taylor received a B.A. in economics summa cum laude from Princeton University in 1968 and a Ph.D. in economics from Stanford University in 1973.

Customer Reviews

Easy Money, Hard Times
Much of the popular media has jumped to conclusions that so called Neoliberal policy, has failed, and Keynesian economics has prevailed. Yet many economists remain skeptical about the popular view of the crisis. John Taylor has provided interesting and compelling evidence that easing of credit by The Federal Reserve in recent years caused the boom that led to the Subprime Crisis. This book is important because the media and some economists have blamed this crisis on laissez faire far too quickly, often without citing any real evidence. Taylor shows how actual inquiry into the facts contradicts so much of what you hear from the popular press. Taylor and the Hoover Institution deserve much credit for publishing a book of this quality so quickly.

A Monetarist Perspective of the Financial Crisis
The author, John Taylor, is the originator of the policy guideline that was later labeled the Taylor Rule. His commentary on the subject is held in high regard in Economic circles and he has a lifetime of study and experience in this arena.

The book is focused on the "mistakes" made by the Federal Reserve since 9/11 and the subsequent consequences. The author makes good use of graphs to show historical trends and effects of policy decisions. The book is written with an objective tone and is easy to understand. It is short and can be read in 2 hours. There is a nice Frequently Asked Questions section in the back to cement the authors case.

I gave the book 4 stars instead of 5 because it was not clear what was the cause of all of the policy errors by the federal reserve. An increasing minority of persons suspect political motives are the culprit as the Federal Reserve is not entirely independent. The book is a good critique of the policy decisions of the current decade and a defense of Monetarism and Central Banking in general.

For a good critique of Monetarism, I recommend Thomas Woods book.

Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

Clear thinking amplified by clear writing
The physicist Richard Feynman is reputed to have argued that an "expert" is someone who can thoroughly explain a complicated subject to beginners. Those self described "experts" incapable of making their subject accessible, are, he maintained, probably not real experts at all.

Stanford economics professor John Taylor, who formulated "the Taylor Rule", a rule for guding Central Bank monetary policy, provides a critical review of recent policies that is truly expert in the Feynman sense.

Taylor argues that the Federal Reserve's low interest rate policies is the root cause of the current crisis. Not in the sense that low interest rates are inherently distorting, but in terms of the impact of rapid change. US interest rates tumbled over the course of a year, as the Fed responded to the challenges of the burst of the Dot Com bubble and 911. Taylor argues (via "counterfactuals") that a more gradual decline would have avoided the catastrophic consequences.

Regardless of specific diagnoses, Taylor's book is concise, easy to read and well argued. I read the book in three easy sessions of under an hour each. Taylor provides references to more technical material and his use of graphics and illustrations is clear, relevant and to the point. Taylor makes his arguments comprehensible to newcomers without losing any sophistication or relevant technical detail.

Taylor's approach should be the model for the serious engagement of the public on critical public policy matters. But don't hold your breath.