Book Bits | 9 September 2017

The Myth of Independence: How Congress Governs the Federal Reserve
By Sarah Binder and Mark Spindel
Review via Publishers Weekly
Binder and Spindel have written an extremely thorough study of the Federal Reserve that shows how the institution, while in theory insulated from politics, is in reality anything but. Binder and Spindel persuasively argue that Congress and the Federal Reserve are interdependent entities. By giving the Fed the power to control monetary policy and steer the economy, lawmakers gain their own convenient scapegoat when the economy sours. Likewise, the Fed relies on Congress for political support to implement “unpopular but necessary” policies.

The Fama Portfolio: Selected Papers of Eugene F. Fama
Edited by John H. Cochrane and Tobias J. Moskowitz
Summary via publisher (University of Chicago Press)
Few scholars have been as influential in finance and economics as University of Chicago professor Eugene F. Fama. Over the course of a brilliant and productive career, Fama has published more than one hundred papers, filled with diverse, highly innovative contributions. Published soon after the fiftieth anniversary of Fama’s appointment to the University of Chicago and his receipt of the Nobel Prize in Economics, The Fama Portfolio offers an authoritative compilation of Fama’s central papers. Many are classics, including his now-famous essay on efficient capital markets.

What We Owe: Truths, Myths, and Lies about Public Debt
By Carlo Cottarelli
Review via Foreign Affairs
Cottarelli, who once headed the Fiscal Affairs Department of the International Monetary Fund, has put together a primer on public debt, primarily in relatively rich countries. He sets out to debunk a number of common misconceptions about government borrowing, especially the idea that unless a government pays off its debts, it is fiscally unsound or is somehow cheating future generations. He draws on extensive scholarly research about debt, much of it carried out by IMF staff, and presents his findings in comprehensible, nontechnical language. The book reports on how high public debt (relative to GDP) must be, and under what circumstances, before it becomes a drag on economic growth.

On the Verge
By Rebecca D. Costa
Summary via publisher (Rosetta Books
“There can be no greater advantage than certainty of the future. Not in nature. Not in business. Not in governance.” So begins Rebecca Costa’s much awaited exploration of foresight: “the crowning achievement of human ambition.” According to Costa, advances in Big Data, predictive analytics, genomics, artificial intelligence, and other breakthroughs have made it possible to pinpoint future results with mind-blowing accuracy—cracking the door to what Costa calls predaptation: the ability to adapt before the fact. Never before has the information needed to avert danger, get the jump ahead of others, or prepare for the inevitable been so clearly within grasp.

Finance, Society and Sustainability: How to Make the Financial System Work for the Economy, People and Planet
By Nick Silver
Summary via publisher (Palgrave Macmillan)
This book is a critical analysis of the impact of the financial system on the economy, society and the natural environment. It cuts through the noise to looks at its purpose, its activities, and what it does in practice. Unlike other books that cover the last financial crisis and the risk of another one; this book is about the consequence of the financial system continuing in its current form. It argues that the financial system is a construct of flawed economic theories, designed in the hope that the market will efficiently allocate society’s capital. Instead, the finance sector allocates savings and investment to maximize its own revenues, with resulting collateral damage to the economy, society and the environment.