Book Review: Lords of Finance

Lords of FinanceLords of Finance is described as the story of the four central bankers who set up the world for the Great Depression. However, the reader can expect to get a whole lot more than that from this book–whether he wants it or not.

It is mostly written in a biographical style, with more incidental details than necessary. The financial side of the story is explained, but not with as much depth or clarity as many other books of this type offer. Some general claims about the macroeconomy are made without enough explanation about macroeconomics to back them up.

If you can filter out the unnecessary details and survive the dry, slow-paced account, there are some valuable takeaways from this story. The central bankers failed to get the economy out of the Great Depression or even to soften the landing. However, strikingly similar methods were used decades later to address the 2007-2008 Financial Crisis.

John Maynard Keynes is Ahamed’s go-to source for criticism of banking policy throughout the book. Keynes comes out of this looking like the sane, intelligent hero who could have saved the world from doom. While Keynes’s criticisms of the central banks were correct, Keynesian economics aren’t drastically different, and they too failed to recover the economy from the Great Depression.

The unsurprising conclusion of this book is that central bankers are lame. What’s missing from the book is the fact that these four central bankers are not alone. Whether you are a banker, politician, or economist, if you think you can micromanage the macroeconomy, you are egotistical and out of touch with reality. You have either read too many economic treatises, not enough economic treatises, or not the right ones.

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