“Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America” is by Danielle DiMartino Booth.
This book rips apart any trust in anything the Fed does. Booth worked at the Fed for a few years, and paints a picture about the typical government attitude towards work – everyone comes and leaves strictly on 8 hours, no one there watches CNBC or knows about Fed policy before hand. (She had to run to the break room to watch CNBC just to hear about the Fed decision). No one seems to care about what goes on in the outside world, they are just academics that care about their Keynesian models and what the Core CPI measure is.
Booth worked under a sane Fed president, who, like her, worked in the private sector. He disagreed with the direction the Fed was going. He saw that the central banks QE (quantitative easing, money printing) and their ZIRP (zero interest rate) policies were creating distortions in the economy. Like seniors, trying to live off the interest of a CD (which now is at 1%), and social security, have a tough time getting by as prices on things get higher.
The Fed judges inflation based off of “headline” inflation, which strips out food and energy. So, despite there being this high inflation, the Fed doesn’t recognize it. Booth also slams the central bank over the lack of wage inflation, and the dire employment situation.
The result of zero interest rate policies is companies have been borrowing money at super low rates, and investing it by buying back their own shares, or paying more in dividends. Buying back your own shares is used to boost up share prices, less shares outstanding, so their is more demand for the remaining shares. Paying bigger dividends boost share prices also, the share holder sees more income, so the price of the stock goes up
. If the environment was normal, companies would invest their money in growing the business, instead they are using it to boost their stock options and bonuses.
This is definitely a good book, and worth the read!