Book Review: Central Banking 101

After recognizing the role of the most important market, it was time to seriously learn more about it. I grabbed Central Banking 101 by Joseph Wang and couldn't stop reading. This is a great light read. If you've ever wondered why people pay so much attention to Fed decisions, read this book.

The interest rates chapter was exceptional - examining rates from the central bank's perspective across the entire curve, from overnight to long-term tenors. This was the best chapter and worth the price of the book alone. When I asked for the bigger picture, this was exactly what I was looking for.

The crisis monetary policy chapter covers what happened in 2008 and what might happen in another recession. Understanding the playbook matters, the Fed doesn't improvise, they follow established protocols with modifications.

What really elevated the book were the specific deep dives:

• QE in 2008: How quantitative easing actually works mechanically, not just the theory. The details of balance sheet expansion and how it transmits to markets.

• The 2019 repo crisis: On September 17, 2019, overnight repo rates spiked to 10%. Most people missed this completely. Wang explains why it happened and what it revealed about market plumbing.

• Corporate leveraging: QE pushed long-term rates to record lows, enabling corporations to issue massive amounts of debt for stock buybacks. Apple's gains are a prime example - financial engineering, not operational growth. Much of the equity bull market was Fed policy, not fundamentals.

The main limitation: the book was written in 2020, and Fed policy keeps evolving. Some details are already dated. But the framework remains solid.

My recommendation: read it soon rather than later. The fundamentals won't change, but specific policy tools and implementation details will. The sooner you build this foundation, the better you'll understand what's happening in real-time.