Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis

Available at the Hoover Press, Amazon, Barnes and Noble, Borders or wherever books are sold.

Quotes

  If Milton Friedman and I had written as persuasive an analysis as this, one year—rather than 30 years—after the Great Depression began, the United States might have had a typical recession rather than the greatest downturn in history.
Anna Schwartz, author, with Milton Friedman, of The Great Contraction, 1929–1933

  Big problems confront us, and responses of immense size are on the table. We desperately need a solid and fact-based analysis so that we get the prescription right. John Taylor provides just that. A must-read for everyone involved.
George Shultz, former secretary of Treasury, State, and Labor and Budget Director

  This short volume does a masterful job of tracking the stunning financial market and macroeconomic events of 2007 and 2008, and it provides an organizing framework that will enable the specialist and novice alike to examine these events in a coherent setting.
James Poterba, Mitsui Professor of Economics at MIT and President and CEO of the National Bureau of Economic Research

  John Taylor is one of the very few who points out the errors that the Federal Reserve made during this difficult period and also shows how they could avoid them. Members of Congress should read this book instead of looking for scapegoats in the wrong places.
Allan Meltzer, author of The History of the Federal Reserve

  …cogent, thorough and compelling…Taylor sums up his argument in his subtitle: How Government Actions and Interventions Caused, Prolonged and Worsened the Financial Crisis. Take a moment to absorb that. Although we're told every day that the crisis arose from failures in the free markets—that it represents a crisis of capitalism itself--an eminent economist has now stepped forward to say, in effect, "Nonsense." The markets didn't fail, Taylor argues, the government did.
Peter Robinson, What Caused the Crisis? Forbes.com

  If you want to read a very short book on how we got into the financial crisis, I don't think you could do better than John B. Taylor’s Getting Off Track.
Michael Barone, U.S. News & World Report

  A sobering book by a Stanford University economist demonstrates not only how the feds caused, misdiagnosed and mishandled the financial crisis, but also how their responses continue to make matters worse.
Robin Goldwyn Blumenthal, Barron’s Magazine

  This is a very readable book. Taylor takes the complex and sophisticated research he and colleagues have done over the last several years and translates it into language, accompanied by charts, that is easily absorbed.
John M. Mason, SeekingAlpha.com

  It combines seriousness, brevity and accessibility – and it advances a distinctive argument…of what Mr Taylor sees as the principal policy mistake and the errors that flowed from it. Most commentary on the crisis glides by this issue without even noticing it, so intent are most analysts on blaming deregulation and the fatal flaws of Anglo–American capitalism. Taylor is having none of that, and at the very least Getting Off Track is a bracing corrective to this tendency.
Clive Crook, Financial Times

  Taylor offers a powerful rejoinder to the all too pervasive notion that the financial crisis is indicative of market failure and therefore requires a government solution.
Jerry Tempelman, Business Economics

Reviews
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How They Killed the Economy The New York Review, March 25, 2010

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Is Deregulation to Blame? The Claremont Institute, December 15, 2009

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A book Review of Getting Off Track, by Jerry H. Tempelman, Business Economics is the journal of The National Association for Business Economics, July 2009

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Book Review: Risks of straying from the prudent path Financial times, April 12, 2009

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Book Review: How the Fed got the economy off track Orange County Register, April 5, 2009

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This is a very readable book, SeekingAlpha.com, March 28, 2009

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Taylor Rules Forbes, March 24, 2009

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Taylor Book Blames Fed, Government, For Causing, Prolonging Crisis Market News international, March 17, 2009

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F Is for Fed Barron’s Online, March 14, 2009

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Ad Hoc Fed, Treasury Acts Caused the Financial Crisis, Not Deregulation, Tax Cuts US News, March 10, 2009

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Book Review by Bobbi Emel Book Flap, March 4, 2009

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What Caused The Crisis? Forbes, February 13, 2009

Recent Editorials and Articles
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How Government Created the Financial Crisis, Wall Street Journal, February 9, 2009

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Tax Cuts to Promote Economic Recovery The Australian, February 18, 2009

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It`s the government`s fault - English version (translation) or Portuguese version (original) Valor Economico, March 6, 2009

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The Threat Posed by Ballooning Federal Reserves, Financial Times, March 24, 2009

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Obama worse than Bush - English version (translation) or Polish version (original) Gazeta Wyborcza, March 26, 2009

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Valid Complaints about Spending New York Times, April 1, 2009

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Lost Lesson of the Lehman Bankruptcy, The Arizona Republic, September 17, 2009

Recommended Reading Lists

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“For the Holidays, a Multimedia Guide to Economics,” by Gene Epstein, Barron’s, December 15, 2009

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“Money Books for the Summer Bedside Table,” by Sophie Gilbert, The Washingtonian, August 4, 2009

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“Booking the Economy,” by Bob Samuelson, Newsweek, July 20, 2009

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“Ten Books to Help You Understand the Crisis,” by Cardiff Garcia, Dow Jones, Financial News, June 5, 2009

Podcasts or Video Streaming of Radio/TV Interviews

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Taylor Says Geithner Right to Ponder Exit Strategies, Bloomberg News, September 11, 2009

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Evaluating the Stimulus Package, KQED, September 4, 2009

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John Taylor on the Financial Crisis, EconTalk, July 20, 2009

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Bernanke & the Bond Market, CNBC, May 28, 2009

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Grading the TARP, Bloomberg Television, April 8, 2009

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Treasury Covering Up Massive Fraud?, Fox Business News, April 6, 2009

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G-20 Expanding Global Trade, Fox Business News, April 2, 2009

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Getting off Track, Reason.TV online, March 23, 2009

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H3: Dr. Kenneth Tokita, Erwin Chemerinsky, John Eastman, Dr. John Taylor, Hugh Hewitt Show , March 18, 2009

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Bear Stearns: One Year Gone, CNBC, March 16, 2009

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Breaking Down the Stimulus, The Tavis Smiley Show, February 19, 2009

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Professor John Taylor joins Lateline, ABC TV Australia, February 16, 2009

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What Caused the Crisis? , David Boze Show, February 11, 2009

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Selling the Stimulus , KQED, February 10, 2009

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It's The Government, Stupid!, CNBC, February 9, 2009

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The Role of Governments in the Global Financial Crisis, ABC, February 6, 2009

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Taylor Doubts Obama's Stimulus Will Boost U.S. Growth, Bloomberg Television, January 30, 2009

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Taking the Next Step with TARP, CNBC, January 26, 2009

Blogs and Media References

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What Caused the Financial Crisis, Powerlineblog.com, September 10, 2009

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The Case Against Intervention, Weeklystandard.com, September 10, 2009

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Fed Wrestles Over How to Inject Credit Into Economy, Bloomberg.com, March 18, 2009

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The ongoing problems of "stimulust", Foreign Policy, March 15, 2009

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Afternoon Reading: Who Started the Financial Crisis?, Wall Street Journal: Deals Journal, March 10, 2009

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Lesson of financial crisis: communications is policy, Podium Pundits, March 9, 2009

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Secondary Sources: Stimulus, Nationalization, Debt, Regulation, Wall Street Journal blogs: Real Time Economics,March 9, 2009

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The Fed’s moral hazard maximising strategy, Financial Times, March 6, 2009

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Dr. Anne Layne-Farrar, Card Check; John Taylor, Getting Off Track, The Ed Morrissey Show, March 5, 2009

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Fiscal policy: the ideological war On Line opinion, March 4, 2009

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Ex-Bush Economist: Blame The Federal Reserve For The Crash, CBS News: EconWatch blog, February 27, 2009

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G-7 Takes ‘Back Seat’ as Crisis Pushes G-20 to Fore, Bloomberg.com, February 13, 2009

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Central Banks Sacrifice Independence as Crisis Grows, Bloomberg.com, February 9, 2009

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Fed’s Target Rate: Less than Zero?, Wall Street Journal blogs: Real Time Economics, January 28, 2009

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Touchdown: When Do Financial Stocks Hit Zero?, Seeking Alpha, January 27, 2009

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John Taylor Clears the Way for an Informed View of the Financial Crisis, Seeking Alpha, January 23, 2009

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The great ideological divide, WAtoday.com.au, January 5, 2009

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Crisis Management with John Taylor: Chapter 1 of 5, Uncommon Knowledge, January 5, 2009

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Outspoken Fed Critic Taylor Coins ‘Mondustrial Policy’, Wall Street Journal blogs: Real Time Economics, January 5, 2009

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Fed’s Dudley Says Loan Programs Have Mitigated Market Damage, Bloomberg.com, January 4, 2009

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Stanford Economist Taylor Says Fed Policy ‘Excessive’ in 2003, Bloomberg.com, December 30, 2008

Translations

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Website for the Spanish version of the book

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Facebook link for the Italian version of the book

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 About the Book

Throughout history, financial crises have always been caused by excesses—frequently monetary excesses—which lead to a boom and an inevitable bust. In our current crisis it was a housing boom and bust that in turn led to financial turmoil in the United States and other countries. How did everything deteriorate so suddenly and dramatically? In Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis, Hoover fellow and Stanford economist John B. Taylor offers empirical research to explain what caused the current financial crisis, what prolonged it, and what worsened it dramatically more than a year after it began.

The author tells how unusually easy monetary policy helped set the crisis in motion, as interest rates at the Federal Reserve and several other central banks deviated from historical regularities. He explains monetary interaction with the subprime mortgage problem, showing how the use of these mortgages, especially the adjustable-rate variety, led to excessive risk taking. In the United States this was encouraged by government programs designed to promote home ownership, a worthwhile goal but overdone in retrospect. Looking ahead, the author suggests a set of principles to follow to prevent misguided actions and interventions in the future.

John B. Taylor is the Bowen H. and Janice Arthur McCoy Senior Fellow at the Hoover Institution and the Mary and Robert Raymond Professor of Economics at Stanford University.

 

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