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A Review of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse

By: Brittany Leber
Alum Business Administration Major from Lake Stevens, Washington
Reviewed May 27, 2016

In The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse, Mohamed  El-Elrian explains that the economy is rapidly approaching a T-junction. One path leads to another economic downfall, possibly worse than ever before. The other path, if his understandings and suggestions are faithfully applied, will lead to balance and stability. Perhaps this is a bit of an overstatement, however El-Elrian’s observations are made with an immutable confidence.
 
Mr. El-Elrian makes several key points about why and how the 2008 financial crisis happened and spends the first half of this book driving home their importance. The first few points involve central banks directly. The author believes that the failure to regulate banks caused excessive risk taking; this led to aggressive bailouts by central banks. When the central banks implemented their radical tactics to stabilize the economy, they did not realize the dependence it would create. El-Elrian argues that this inevitably led to unemployment and inequality. El-Elrian also writes about how rapidly changing technology and lack of diversification are major contributors to the problem. He goes on to point out that the way to fix the global economy is by reducing political barriers, creating newer effective policies and regulations, and by reducing debt overhangs. The author’s main points seem to be that banks should be more heavily regulated, debt should be relieved from the working class and emerging economies (paid for by higher taxes on the rich), and more regulations should be put into place in order to ensure diversity and equality.
 
While El-Elrian has several good ideas on how to prevent the next collapse, he does not provide a way for politicians or individuals to implement these ideas. The author also fails to recognize or mention that by taking away individuals and companies economic freedom, with increased regulations and restrictions, he may hinder the actual growth of economies. Although the author make a great many points and covers the material well, it is easy to look back, see the problems, and create an “easy” solution(s). However, life is rarely easy and there are often unintended consequences of regulations and new policies, no matter how good the intentions.

I would recommend reading this book, but with a healthy skepticism and a few key points in mind. This is a valuable book with many insights, I however, would suggest that any who read it keep in mind that there is never one easy solution. As Adam Smith, a founder of the study of economics, points out - people have self-interest which drives the economy, but people are also guided by an invisible hand. Adam Smith did not believe that we needed more regulations in order to stave off economic crises, and I don’t believe we need them now. We live in a world where corruption exists and restricting economic freedom does not benefit those who already play by the rules.