Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic---and Prevented Economic Disaster

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Readers should know that I read these books as an insider. I covered the Fed in the Alan Greenspan and Ben Bernanke years for the Wall Street Journal and wrote a book about the Fed’s role in the global financial crisis. In my current job as director of the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy, I talk frequently to both Smialek and Timiraos. I read and commented on Timiraos’s manuscript. Smialek’s book opens with an unnamed interviewer asking Powell on a webcast in the early weeks of the pandemic how much support the Fed could provide during the emergency. (“There’s no limit on how much of that we can do,” Powell said.) The interviewer was me. Both books are stuffed with juicy little details, reminders that policymaking is not all white papers and spreadsheets. Quarles has since left Washington, and Brainard has a key White House post from which she is pressing the Fed and other regulators to undo much of what Quarles and the Trump administration did to ease up on the banks. If she ends up succeeding Yellen as treasury secretary, people will be scrutinizing the passages about her in these books.

Brainard in some ways was even more aggressive than Powell or his predecessors in expanding the Fed’s lending programs, as soon nearly every sector of the financial market was poised to benefit from abailout: “Brainard was pushing the Fed and the Treasury to accept more risk.” One by one, Powell and Brainard justified new support programs, sometimes by merely pointing to other previously supported sectors. “If the Fed was going to buy corporate bonds, it needed to do something for municipalities too,” Brainard rationalized in her no‐​sector‐​left‐​behind strategy. Because she did not really know much about the municipal market, she reached out to Kent Hiteshew, who Timiraos describes as one of the crowd of “well‐​off New Yorkers with second homes outside the city.” During the Obama years, Hiteshew managed the Treasury Department’s response to Puerto Rico’s fiscal and debt crisis, and Brainard peppered him with questions about what was happening in the municipal market. Soon she was asking him to work for the Fed for afew months. Alan S. Blinder, Professor of Economics at Princeton University and former Vice Chair of the Federal Reserve Yet while the books have obvious overlap, they are quite different. Timiraos, the Wall Street Journal’s chief economics correspondent, focuses tightly on the monetary and fiscal response to the pandemic with just enough historical context to provide necessary perspective. It’s the traditional, fast-paced first draft of history. The quotes demonstrate Timiraos’s substantial access to Powell and others; the source notes repeatedly cite “author’s interview.” Mnuchin is a major character, dubbed “Secretary Minutiae” because of his reluctance to delegate negotiation of the details on COVID-19 lending programs. Although Timiraos avoids judging the wisdom of the Fed’s actions, Powell is clearly the hero who saved the U.S. economy from collapse. The book’s strength lies in its detailed original reporting and the fast-paced narrative of the harrowing month that ... the coronavirus was taking off in 2020."A summary of the Fed and its major actions of the last few decades, leading up to a detailed blow-by-blow of the brief but steep 2020 recession and its fallout. This is, however, far from an exhaustive or unbiased academic view of those events.

Smialek has a great time contrasting Quarles’s free-market, small-government views to those of one of his heroes—and his wife’s great-uncle—President Franklin D. Roosevelt’s Fed chair, Marriner Eccles, who she says was a Keynesian before the word was invented. (Eccles, though, as she recounts, later played a key role in establishing the Fed’s independence from the White House.) Smialek describes Quarles as “an unusually colorful character for a Fed official,” though the only evidence she offers is his habit of peppering speeches with phrases such as “kaleidoscopic gallimaufry.” Timiraos dwells mainly on Quarles’s role in fashioning the Fed’s response to the pandemic. Smialek writes a bit more about his role—newly relevant in light of this year’s banking crisis—in loosening some of the regulatory strings imposed on banks after the global financial crisis with Powell’s support and over Brainard’s strenuous objections.

This is all to say that hero-worshiping Jay Powell is a worthless exercise in my opinion, and the book would've been stronger if it kept a more balanced view of all the decisionmakers at play, and delved more into analyses of Main Street if Timiraos cares so much about how the Fed influences Main Street.

Fed Chairman Jay Powell exemplifies the evidence based pragmatic but deeply compassionate Central Banker who along with his team did ‘whatever it took’ to ensure the US and the world didn’t experience what could have been a global depression. Smialek seeks to distinguish herself from “many people who write about the Fed” and “suggest that its officials have saved the world” or “that they have ruined the world.”

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The inside story, told with“ insight, perspective, and stellar reporting,” of how an unassuming civil servant created trillions of dollars from thin air, combatteda public health crisis, and saved the American economy from a second Great Depression (Alan S. Blinder,former Vice Chair of the Federal Reserve). A]n excellent book...on Fed chairman Jay Powell's actions during the early stage of the pandemic. ” Trillion Dollar Triage is the definitive, gripping history of a creative and unprecedented battle to shield the American economy from the twin threats of a public health disaster and economic crisis. Economic theory and policy will never be the same. Unlike Timiraos, Smialek seeks to distinguish herself from the “[m]any people who write about the Fed” who “suggest that its officials have saved the world” or “that they have ruined the world.” Fed officials, including Powell, are “ordinary people who control increasingly potent tools,” she writes. (Maybe, but Greenspan was anything but “ordinary”; Yellen rose to the top of a profession that was—and, in many respects, still is—hostile to women; and Bernanke won a Nobel prize.) Smialek makes a major character of Neel Kashkari, the dynamic, press-friendly, and charismatic president of the Minneapolis Fed who has an expansive view of the Fed’s remit—not because he is central to the action, but because she finds he has “an interesting perspective.” Throughout the book, it’s not clear to whom she has been talking. “To protect my sources and allow a narrative format,” she writes, she doesn’t identify her sources even in footnotes. Conflict with the evolving narrative / The Fed’s pandemic response was so big and so fast that Ibelieve it contributed greatly to inflation gaining afoothold in the U.S. economy after a40‐​year slumber. When Timiraos was finishing the book in 2021, the prominent narrative was that the mix of Congress’s fiscal response and the Fed’s 2020 accommodative policy propped up the economy and the financial system, with aminimum of ill effects. But now it seems that Powell overdid the monetary stimulus, the lending programs, and support for fiscal stimulus. He was spectacularly wrong on labeling the inflation “transitory,” astatement that economist Mohamed El‐​Erian has described as “probably the worst inflation call in the history of the Federal Reserve.” The Fed failed in its pandemic response in one of its primary mandates under law: price stability. By encouraging fiscal profligacy, Powell no doubt made inflation worse.

This book left me with a lot of thoughts about not only the Fed, but its seeming independence from the US government, which clearly likes to use the Fed as a tool to further its goals. Timiraos does a really good job at building up this theme of the illusion of independence through the initial summarized history of the Fed and its beleaguered leaders, particularly highlighting such instances as Truman and Nixon's desperation and bullying tactics as a grim parallel to Trump's treatment of Jay Powell during his presidency. I don't put it in on Timiraos to draw every possible conclusion about Powell's actions or beliefs, certainly not before Powell's term eventually ends, but Timiraos does make a noticeable effort to not criticize Powell the same way he criticizes other actors in his book. That is, at all. He doesn't criticize Powell at all. 😂 Timiraos does not consider it, but this strategy of pulling together like‐​minded thinkers may have led to groupthink and may have been part of the reason that the Board would later prove so wrong on its inflation assessments. There was rarely adissenting voice at the table when it came to monetary policy and Fed lending. Timiraos describes one of the pandemic’s more hectic weeks: “With the Treasury market melting down, Powell faced little opposition to these market‐​stabilizing measures.” Alater decision to accept short‐​term municipal debt as collateral for funding facilities took all of two hours to go from initial suggestion to approval to public announcement. The first of (what will inevitably be) many play-by-play narratives about the Covid economic policy response. Recommended.The inside story, told with “insight, perspective, and stellar reporting,” of how an unassuming civil servant created trillions of dollars from thin air, combatted a public health crisis, and saved the American economy from a second Great Depression (Alan S. Blinder, former Vice Chair of the Federal Reserve).