Friday Roundup, December 13th

  • In our Books section this week Vern McKinley reviews The Alchemists: Three Central Bankers and a World on Fire:

Irwin’s book starts out as a history of central banking as he chronicles a litany of central bank failures, which can be summarized as ‘stories about how central bankers completely tanked their nation’s economy.’ He in sequence recounts the story of the first central bank in Sweden, Stockholms Banco, the predecessor to today’s Sveriges Riksbank. It was led by one Johan Palmstruch, who Irwin refers to as “history’s first central banker” whose “actions as a man with the power to print money at will had decimated Swedes’ personal savings, wrecked their national economy, and forced the government to intervene to prevent complete catastrophe.” This is followed by the story of the German Reichsbank, its creation in 1876 and ultimately the hyperinflation it created in the early 1920s that “wiped out the savings of an entire generation.” You would think that Irwin’s recitation of this history would make him skeptical of the idea that we can get a room full of very smart people and plunk them down in Washington, DC, or London or Frankfurt and with minimal effort achieve through alchemy the basis of a stable financial system. Unfortunately, that skepticism does not come through in the later stages of the book, as his comments mostly effuse gushing praise for modern central bankers.