Book Review: 'The Way We Live Now,' By Anthony Trollope] This week, the Federal Reserve ended the quantitative easing program. Author John Lanchester says Anthony Trollope's 19th century novel The Way We Live Now clarifies the current financial situation.
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A 19th Century Novel Explains Quantitative Easing

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A 19th Century Novel Explains Quantitative Easing

Review

A 19th Century Novel Explains Quantitative Easing

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ARUN RATH, HOST:

The Federal Reserve announced a policy decision this past week - an end to a long-running stimulus program known as quantitative easing. That was the tool the Fed used to stabilize the economy after the 2008 recession and to protect the recovery thereafter. But the term can be confusing. To put the financial language in historical context, here's author John Lanchester with a reading recommendation.

JOHN LANCHESTER: This might seem like an odd time to recommend the 19th century novelist Anthony Trollope. His writing is famously flat and neutral. You get the impression that if he accidentally wrote a really good phrase or image, he would take it out so it wouldn't distract from the story. But there's an exception, of course.

"The Way We Live Now" is Trollope's longest and greatest novel. It satirizes a society corrupted by finance. Before he wrote it, Trollope spent 18 months in Australia. Coming home to Britain was a shock. He saw greed everywhere. That anger and the sense of moral crisis are what give "The Way We Live Now" its special energy. It's literature's greatest portrait of a financial scandal, with a corrupt financier at its heart - the magnificently ruthless Melmotte.

Melmotte's plan is a classic Ponzi scheme. He's going to inflate the value of shares he owns in a railway with complete disregard of the hapless other investors. The book is about a bubble, which is especially relevant today. Right now, our economic news is dominated by the end of quantitative easing. We're told that the American economy is recovering, but there's a fear among the money people. They're hoping that QE hasn't unintentionally created a giant bubble in asset prices. As chance would have it, the speculative bubble in "The Way We Live Now" is also based on American assets, since the railway runs between Salt Lake City and Veracruz. Spoiler alert - it doesn't end well.

RATH: The book is "The Way We Live Now" by Anthony Trollope. It was recommended by John Lanchester, author of "How To Speak Money."

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