The Fed has entered a new era,and hardly anyone understands the rules of its game.Where once it could control the economy by controlling what the banks did,it now must push directly on the markets.But how? Why do interest-rate changes sometimes move the markets as expected,and sometimes fail to have any effect? What else is the Fed doing that might affect asset prices and growth rates?The links between Fed decisions and market reactions have become far more complicated and confused than ever before.What is an investor to make of it?

In The Fed,one of the world's best financialjournalists offers a major new explanation of how theFed works and how its world has changed...

Martin Mayer's engaging examination of the much-talked-about but little understood U.S.Federal Reserve begins with the dramatic events of October 1998,a month in which the market closed "lock limit down" for the first time in almost a decade.At the same time,Alan Greenspan,the Fed's chairman,began radically reinventing his agency's role and its influence on the market.Indeed,while most of the rest of the world's countries were diminishing the role of their central banks,Congress was granting new powers and responsibilities to the Fed.Mayer's book--part history,part journalistic report,and all detailed analysis--looks at the significance of those powers,their benefits and risks,and what they mean to the markets.He also devotes chapters to the day-to-day inner workings of the Fed,its influence in international financial matters,and its possible role in coming years.

As a prolific author and respected economics scholar,Mayer has been immersed in the financial world for decades and provides both bird's-eye and long-range views of money's complicated maneuverings.Without his excellent storytelling abilities and fluid writing style,this book would be heavy going for anyone who doesn't speak the language of high finance.Though it is most definitely dense (and its structure somewhat erratic),Mayer manages to make a complicated subject accessible for those with more interest than actual knowledge.An informative look at a hitherto enigmatic but influential institution.

Preface

PART ONe: MaGic TRICKS

 Chapter 1: The Magician on the World Stage

 Chapter 2: The Magician at Home

PART Two: CENTRAL RANKS

 Chapter 3: What Is a Central Bank?

 Chapter 4: The Question of Independence

PART THREE: AVOIDING CATASTROPHE

 Chapter 5: The System and Its Risks

 Chapter 6: The Amen'can Lender of Last Resort

PART FouR: MAKING MONEY

 Chapter 7: The Age of lnvenlion

 Chapter 8: Monetary Policy in the Maelstrom

 Chapter 9: Disaster Time

 Chapter 10: Greenspan and the Markets

 Chapter 11: Internationally

PART FIVE: THE DAY JOBS

 Chapter 12: The Payments Franchise

 Chapter 13: Supervisions

 Chapter 14: The Fed and the Poor

PART SIX: WHAT'S NEXT?

 Chapter 15: The Fed in Our Future

Notes

Index