Secrets of the Temple.

• Author: Murray, Alan S.

Secrets of the Temple.

I was granted an audience with Paul Volcker twice during his tenure as Federal Reserve Board chairman, and both times the opening ritual was the same. My colleague and I were ushered into his office, and we stood in silence while "the chairman," shrouded in cigar smoke, continued to work without raising his head or acknowledging our presence. I can't remember how long the silence lasted--perhaps only 10 or 20 seconds-- but it was long enough to make it clear that we were sand fleas in this man's universe. It was one of his many ways of arrogating power.

Paul Volcker has been widely praised as representing the best of "the Fed." He is a brilliant technocrat, and he is rightly credited with taming inflation at a time when few thought it could be done. But Volcker also represents what is most troubling about the Federal Reserve. Like his institution, he is aloof and disdainful of the messy ways of democratic government. He always operated in secret, and he was proud of his ability to give evasive answers that obscured the central bank's most important actions, even when those actions were sending shock waves through the lives of every American. In response to a reporter's question, Volcker once said gruffly: "We did what we did, we didn't do what we didn't do, and the result was what happened." The response typified his attitude towards an informed public.

Anyone who watched the Volcker Fed in action had to wonder: how can a government based on democratic principles allow so much power to be concentrated in the hands of such an autocratic individual? And how can the economic fate of the nation be entrusted to an institution run by unelected officials, accountable to virtually no one?

It is because of those questions that I was anxious to read Secrets of the Temple, a new book on the Fed written by William Greider, national editor of Rolling Stone magazine.* Much has been written about the central bank in the past, but for the most part, the authors have been economists or financial analysts, who are more interested in the mechanics of money than its politics. Greider promised a different view: an indepth look at how this enigmatic institution fits--or doesn't fit--into the fabric of democratic society.

* Secrets of the Temple. William Greider. Simon & Schuster, $24.95.

On one level, Greider's book fulfills the promise. As the title suggests, he reveals the "secrets" of the Fed. Central Bank officials were surprisingly candid in their discussions with him and enabled him to remove the veil of mystery surrounding monetary policy. He explains the arcane actions of the Fed in clear prose and faithfully traces the stark human consequences of those actions. He exposes the technocrats who guide Fed policy as ordinary mortals susceptible to their own errors, miscalculations, pride, and embarrassments. With admirable diligence, he delves deeply into...