The End of Easy Money and the Renewal of the American Economy
By Peter S. Goodman
336 pp. Times Books/Henry Holt & Company. $25
The delightful motif that enlivens Peter S. Goodman’s otherwise sobering new book on economic delusion suggests that we’ve been living in Neverland. The fairy dust of easy money — heedless borrowing by homeowners and investment bankers alike — has lost its magic, and now we have returned to harsh reality.
Goodman, a national economics correspondent for The New York Times, doesn’t go so far as to match literary characters with real-life figures, but clearly the former Federal Reserve chairman Alan Greenspan would be his Peter Pan: the fantastical flying boy who wouldn’t grow up to confront the adult world, where his theory of pristine, self-correcting markets simply doesn’t work the way he wishes it would. If Greenspan is Peter, then his band of Lost Boys who live with him in Neverland would include the current Fed chairman, Ben Bernanke, and the chief White House economic adviser, Lawrence Summers. Unless our Lost Boys imitate their literary counterparts and return to the gravity-bound world, we could face further rounds of economic disaster.