Review of The New Lombard Street: How the Fed Became the Dealer of Last Resort by Perry Mehrling

Abstract

Much of this slender book centers on the tensions of the two opposing views of money in the economy. The view of economics peers through the veil of money to see how capital investments in the past determine present prospects. The view of finance focuses on the present valuation of future projects. Both views largely take money as a given, and ignore its different forms and the institutions that allocate it. Perry Mehrling, a professor of economics at Columbia University, focuses on where the two views meet: in the present. Common at the Fed’s conception, the “money view” has returned and allows us to bridge the gap where finance and economics meet.