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

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If what I said seems clear to you, then you must have misunderstood.” Ben Bernanki, chairman of the Fed. The first six chapters set the stage for the drama that follows; chapters 7 through 14 provide a real-time account of the crisis that threatened the global economy and economic policymaking between March and June 2020; chapters 15 through 17 and the epilogue cover the Fed’s new framework, adopted in August 2020, and the subsequent inflation that the Fed saw as transitory, but began to look anything but that during the last months of 2021 and early 2022 as Timiraos was finalizing his manuscript. By the time this book was released in March 2022, 12-month consumer price inflation had soared to 8.5%, the highest rate in four decades. Thus, what was supposed to have been a book about Powell’s courageous leadership at an extraordinary time winds up with many loose ends dangling, not because Timiraos doesn’t want to tie them up but because the story he set out to tell isn’t the full story that history will tell when all is said and done. As I write this review, inflation has yet to moderate, and we are waiting to see how the economy responds to the 375 basis points of policy-rate tightening so far in 2022 and the additional tightening that Fed policymakers have told us they expect to undertake before they take a pause. It is hard not to believe that however artful Powell was in responding to the pandemic, his legacy will be determined by how he handles the challenges that now confront us. 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. 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. I thought this book was extremely informative and included plenty of politics to give context to the technical dissertations in each chapter, but I also thought there were glaring holes in the presented narrative because Timiraos romanticizes the character of Jay Powell to a noticeable degree. While it was entertaining (for me) to read Timiraos' sarcastic side commentary on Trump's antics from 2019 to early 2021, it was also kind of annoying to have all of Jay Powell's colleagues and opponents cast as either villains or deeply flawed lesser heroes compared to the man himself, to whom Timiraos clearly wishes to give a sainthood. While Powell is commendable for resisting Trump's pressures, I highly doubt that he was or is entirely uninfluenced by others or by his own conservative political views, or that he was purely selfless during those years when in-the-know multi-millionaires like Powell benefited profoundly from the volatile economy. Powell should be commended for thinking fast in 2020, but he did a lot more than just make decisions about how to avert disaster, and time is starting to tell how those decisions are going.

This gushing description is no longer being used to market the book, although it lingers in the deep corners of the internet. The book’s subtitle is in the same vein, although the praise is toned down abit. It is not aging well, given the current economic situation and rising inflation. You might dismiss this as the work of an overzealous publisher, but usually authors review promotional materials and subtitles. 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. In times of economic calm, there’s not much grist for book-length behind-the-scenes accounts from Fed beat reporters. But Powell’s tenure has been consequential, weathering the COVID-19 pandemic, tumult in the U.S. Treasury market, threats of firing by Trump, a new spotlight on racial inequality in the U.S. economy, a significant rethinking of the Fed’s monetary policy strategy, Russia’s invasion of Ukraine, the unwelcome return of inflation, and, recently, a banking crisis. And while the Fed has always been a very important actor in the U.S. and international economies—the sub-subtitle of my 2009 book was “How the Federal Reserve Became the Fourth Branch of Government”—the global financial crisis and the pandemic underscored just how it has effectively become the central bank and lender of last resort to the whole world. There is a lot for a couple of journalists to write about. 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.

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In classic Washington fashion, Powell and Quarles both worked at the law firm of Davis Polk & Wardwell and at the politically well-connected private equity firm Carlyle Group. Powell recruited Quarles to work with him at the Treasury Department in the early 1990s and recommended him to Trump for the Fed post. 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. A]n excellent book...on Fed chairman Jay Powell's actions during the early stage of the pandemic. ”

Ellen Meade was on the official staff of the Fed’s Division of Monetary Affairs from 2011 to September 2011 and was Special Adviser to Vice Chair Richard Clarida from October 2018 through December 2020. of the Fed’s weekly balance sheet (the H.4.1 release) began showing a negative number for the liability item “Earnings remittances due to the Treasury” (residual net earnings) in early September 2022. The first of (what will inevitably be) many play-by-play narratives about the Covid economic policy response. Recommended. Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic---and Prevented Economic Disaster

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Both books are stuffed with juicy little details, reminders that policymaking is not all white papers and spreadsheets. 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. 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. 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. 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 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). 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). The books lays out in detail the perilous state the US economy was in during March 2020. Credit looked like it was going to completely freeze and the movement of money in the economy looked like it was coming to a complete standstill. As everyone rushed to cash, conventional wisdom was turned on its head as even so called ‘safe investments’ like 10 year US treasuries were being sold off at discounts. David Wessel, Author of In Fed We Trust: Ben Bernanke’s War on the Great Panic and Director of Hutchins Center on Fiscal & Monetary Policy, Brookings Institution

I really liked this book and enjoyed how many thoughts it sparked in me. I wish the book didn't favor conservative viewpoints as heavily as it did, or unequivocally praise Jay Powell, or try and make the case that a mysterious Fed is mysterious on purpose to avoid public panics, because I think the whole argument is useless in the age of social media where people are gonna find out what they wanna find out one way or the other, and reversing the relationship between the Fed and the common man is probably impossible now that it exists. 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. 😂 So, what do we learn about Powell, who must be reminded of the giants who preceded him every time he walks by the portraits of former Fed chairs that hang in the corridor outside his office? When the Obama administration was considering Powell for the Fed board, Smialek reports, a memo to the president read, “Perhaps the biggest downside of Powell is that he would bring less thought leadership and creativity … than some other candidates might. Nevertheless, he brings many other strengths.” After he got to the Fed, according to Timiraos, he groused that the Fed’s Ph.D. economists talked to him as if he were “a golden retriever.”