March of 2008 was a big month for my wife, Sara, and I. At the time, we were in our mid-twenties. Sara was a public school teacher in Culpeper, Virginia. I was a graduate student at the University of Virginia. That month, after weeks of searching and deliberation, we bought a house. It was by far the largest investment of our young marriage. Our new place was a modest townhouse in Culpeper, but it was everything we wanted at that time. Our excitement and sense of accomplishment, however, were quickly replaced by anxiety and regret. On the morning of September 15, 2008—the day after my twenty-sixth birthday—I started my day with a drive to Charlottesville. It turned out to be the most memorable commute of my life. As usual, I tuned into National Public Radio as I hit the road. For the next hour, I listened to reports of Lehman Brothers’ bankruptcy and the financial chaos that was unfolding. In the weeks and months that followed, we watched helplessly as the equity in our home was quickly turned upside down. As a new homeowner, I felt helpless. Yet, as a young scholar interested in global financial and monetary affairs, I was also enamored with the international financial crisis that was unfolding.
One day, I happened upon a news article that changed the direction of my research. The report explained that the US Federal Reserve was providing hundreds of billions of dollars in emergency financing to more than a dozen foreign central banks. Global dollar funding markets had seized and the Fed, it seemed, had stepped in to provide an unprecedented amount of global liquidity to stabilize the global financial system. This floored me. Most of what I had read in my graduate seminars implied that the International Monetary Fund (IMF) had, for several decades, assumed the role of an international lender of last resort (ILLR) for the world economy. The Fed’s actions seemed more consistent with the work of Charles Kindleberger. In the 1970s and 1980s, Kindleberger and others argued that, throughout history, the world’s leading economy tended to provide international liquidity in times of crisis. The more I researched this topic, the more I learned about the role of the United States as an ILLR dating back as far as the 1960s. Moreover, it struck me as odd that so little had been written about this topic. With little research to build on, I set off to explain—first to myself, then to others—why the United States had for decades regularly chosen to unilaterally bail out foreign economies in times of crisis.
This book is the culmination of more than eight years of work answering that question. Its realization would not have been possible were it not for the support of many family members, friends, and colleagues. I began working on this project while I was at the University of Virginia. During and after my time in Charlottesville, Benjamin (Jerry) Cohen, David Leblang, and Herman Schwartz regularly provided invaluable scholarly and professional advice. It is safe to say that most of what I know about the international monetary system, I learned from conversations and email correspondence with Jerry from his home base in Santa Barbara, California. His patience with me in those early days is beyond my own comprehension. David was both the source of great optimism as well as my first contact when I was looking for data or in need of methodological advice. Herman instilled ambition in my work by consistently challenging me to think big about my research. Together, these three scholars greatly shaped and nurtured this project in its earliest days. I am deeply indebted to each of them. While at Virginia, my research also benefited from the advice of Michelle Claiborne, Dale Copeland, Jeffrey Legro, John Echeverri-Gent, and Sonal Pandya. Each of these scholars provided guidance that helped get my ideas off of the ground and I owe each of them my gratitude.
At Syracuse University, I received helpful comments on my manuscript from Kristy Buzard, Matt Cleary, Margarita Estevez-Abe, Chris Faricy, Shana Gadarian, Dimitar Gueorguiev, Seth Jolly, Audie Klotz, Quinn Mulroy, Tom Ogorzalek, Abbey Steele, Seiki Tanaka, and Brian Taylor. Among this group, Audie, Matt, Margarita, Seth, and Shana deserve special mention. As my office neighbor, Audie became my de facto scholarly mentor as I worked to revise the manuscript. On too many occasions to count, she selflessly opened her door (and her ears) to her junior colleague and provided me with invaluable advice. Matt and Margarita graciously read several chapters of this project and provided insightful and valuable commentary. Seth and Shana freely shared their own experiences—both ups and downs—as young scholars that had recently published their first books. I cannot thank these colleagues enough for their help. I am indebted to James Steinberg for his time and efforts on my behalf. I would also like to thank Rani Kusumadewi for her excellent research assistance on this project. In general, I am thankful for my department’s commitment to creating a very supportive environment that enables junior faculty to thrive.
This book benefited greatly from many other colleagues. First and foremost, Lawrence Broz and Jeffry Frieden deserve special mention for participating in a book manuscript workshop at Syracuse University in October 2013. Both Lawrence and Jeff read the entire manuscript and provided painstaking, detailed, critical commentary that significantly shaped the final draft presented here. The impact of their advice cannot be overstated. I also owe a debt of gratitude to Eric Helleiner who, all the way back in 2009, strongly encouraged me to move forward on this project at a time when I was very close to walking away from it. I am very thankful for my good friend and coauthor Steven Liao who regularly offered methodological and technical help as well as lighthearted conversation over that last two years. Three friends and colleagues from my time at the University of Virginia—Christopher Ferrero, Jon Shoup, and Joel Voss—each provided valuable input in the early stages of the project and, more important, regularly provided camaraderie and needed distraction from work over the last eight years. I appreciate comments received on this work from Stephen Kaplan, Jonathan Kirshner, Stephen Nelson, Tom Pepinsky, and David Steinberg. Patrick McGraw did excellent copy editing work on the book for which I am grateful. I thank David McBride, my editor at Oxford University Press, for his guidance as well as two anonymous reviewers for their incredibly detailed, constructive comments that greatly improved the book.
I owe my largest debt of gratitude to my family for their unyielding love and support. I thank my in-laws, Bill and Vicki, for always supporting me and my scholarly aspirations, even when this took their daughter hundreds of miles away from them. My brother, David, is also my oldest friend and has chipped in these past few years to help me through some tough times. As a child, my parents, John and Kathy, instilled in me an intellectual curiosity that has propelled me to this point. The confidence I drew from their enduring love and belief in my abilities cannot be overstated. My children—Luella, Eileen, and William—are my greatest accomplishment as well as my greatest motivation. On bad days, when working on this book felt like drudgery, my kids reminded me of what really matters most in life. Finally, I am most thankful for my wife and partner of ten years, Sara. Words cannot express her contributions to this project. She has been there each and every day throughout this process. She walked away from her dream job of seven years so I could accept a position at Syracuse University. She selflessly took on the role of lead parent so I could focus on achieving this goal. She endured countless moments of her husband’s exasperation as I wrestled with my research. She picked me up when I failed and she was the loudest cheerleader when I achieved success. Put succinctly, Sara deserves coauthorship on this book. It would not have been written without her. For all she has done, this book is dedicated to her.