The Alchemists Quotes

“[Hyun Song Shin] most accurately portrayed the state of the global economy.
'I'd like to tell you about the Millennium Bridge in London,' he began…'The bridge was opened by the queen on a sunny day in June,' Shin continued. 'The press was there in force, and many thousands of people turned up to savor the occasion. However, within moments of the bridge's opening, it began to shake violently.' The day it opened, the Millennium Bridge was closed. The engineers were initially mystified about what had gone wrong. Of course it would be a problem if a platoon of soldiers marched in lockstep across the bridge, creating sufficiently powerful vertical vibration to produce a swaying effect. The nearby Albert Bridge, built more than a century earlier, even features a sign directing marching soldiers to break step rather than stay together when crossing. But that's not what happened at the Millennium Bridge. 'What is the probability that a thousand people walking at random will end up walking exactly in step, and remain in lockstep thereafter?' Shin asked. 'It is tempting to say, 'Close to Zero' '
But that's exactly what happened. The bridge's designers had failed to account for how people react to their environment. When the bridge moved slightly under the feet of those opening-day pedestrians, each individual naturally adjusted his or her stance for balance, just a little bit—but at the same time and in the same direction as every other individual. That created enough lateral force to turn a slight movement into a significant one. 'In other words,' said Shin, 'the wobble of the bridge feeds on itself. The wobble will continue and get stronger even though the initial shock—say, a small gust of wind—had long passed…Stress testing on the computer that looks only at storms, earthquakes, and heavy loads on the bridge would regard the events on the opening day as a 'perfect storm.' But this is a perfect storm that is guaranteed to come every day.'
In financial markets, as on the Millennium Bridge, each individual player—every bank and hedge fund and individual investor—reacts to what is happening around him or her in concert with other individuals. When the ground shifts under the world's investors, they all shift their stance. And when they all shift their stance in the same direction at the same time, it just reinforces the initial movement. Suddenly, the whole system is wobbling violently.
Ben Bernanke, Mervyn King, Jean-Claude Trichet, and the other men and women at Jackson Hole listened politely and then went to their coffee break.”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire

“For longer-term savings, people turned to other physical goods, even when they had no need for them. A 1923 report from Augsburg shows individual Germans buying six bicycles, seven or eight sewing machines, two motorcycles, all as means of savings. Pianos were also popular,”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire

“would lay the groundwork for “the titles and estates of our future nobility—Duke of Cincinnati! Earl of Lexington! Marquis of Nashville! Count of St. Louis! Prince of New Orleans! . . . When the renewed charter is brought in for us to vote upon, I shall consider myself as voting upon a bill for the establishment of lords and commons in this America, and for the eventual establishment of a king!”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire

“On October 29, 2008, came an announcement: “Today, the Federal Reserve, the Banco Central do Brasil, the Banco de Mexico, the Bank of Korea, and the Monetary Authority of Singapore are announcing the establishment of temporary reciprocal currency arrangements.” Since its founding, the Federal Reserve had been the lender of last resort for the United States. In late 2008, Ben Bernanke’s Fed became the lender of last resort to much of the world.”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire

“When members of Congress asked about the swaps, Bernanke emphasized that the European banks benefiting from the program also made loans in the United States, so the action could be seen as benefiting the U.S. economy directly. But more fundamentally, he was convinced that the world financial system was so deeply interconnected that Europe’s fortunes were the United States’ fortunes too. “In a way,” a European central banker said later, “we became the thirteenth Federal Reserve district.”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire

“Some grappled with the mind-bending question of why rates _can't_ go below zero. What if the Fed tried to set a negative interest rate--that is, effectively levying a tax on savings? Said Greg Mankiw, a Harvard economist and former White House adviser, at the Boston conference, "What a depositor is going to do is say, 'Well, if they're going to charge me money to keep my money at the bank, I'm just going to keep my money at home,' and the only thing you'll generate is a demand for safe assets--and by that I mean assets that are safes because they're going to be buying a bunch of safes so that people can put their money in their safes rather than in the bank." He added that one way around that problem suggested by a student, would be to declare currency with certain serial numbers invalid. "I won't say who he was," Mankiw said. "Because he may want to be a central banker one day.”
― Neil Irwin, The Alchemists: Three Central Bankers and a World on Fire