Instaread Summary of The Only Game in Town Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El Erian
Five out of five stars
It is reasonable and a bit frightening to realize that the prevention of an even greater financial disaster in 2008 and much of the economic recovery since then has been due to the actions of central banks. The directors of the central banks have aggressively engaged in innovative tactics such as quantitative easing and incredibly low interest rates in order to give economies around the world a boost.
Yet, even with all of that, the economic recovery has been slow in most areas in the world and the central banks are near the end of what they can do. It is such an unusual situation that there are now banks that are offering negative interest rates (Bank of Japan) and others are considering the same option. As El Erian emphasizes by putting it in the title of the book, political leaders have largely failed at developing sound economic policies for recovery. Therefore, the only major institutions that can drive economic recovery are the central banks.
As the author of the summary mentions in the author’s style section, El Erian uses a lot of technical jargon, even when it is unnecessary. This can make the book difficult for the general reader to comprehend. Yet, given the significance of the subject, I strongly encourage all people interested in the future direction of the world economy to read this summary amd make their own decision about reading the book.
Several main points of interest are made in the summary, including the reality of the limits of what central banks can do. The frightening point is that they are generally at the limit of what they can do. After all, one is skeptical as to how effective negative interest rates can be.
This book was made available for free for review purposes.