Fed power: How finance wins

The Federal Reserve, created more than a century ago, is the most powerful central bank in the world. The Fed’s power to alter the money supply, move interest rates, and to intervene to save Wall Street and large corporations helps many Americans, but not equally. Specific industries in finance and large businesses reap lopsided and often concealed benefits while homeowners, workers, and Americans of color slip further behind. The substantial expansion of the Fed’s power circumvents America’s constitutional checks and contributes to economic inequality and racial disparities. The second edition of Lawrence R. Jacobs and Desmond King’s Fed Power extends their decisive account of the Fed’s favoritism toward Wall Street and big business during the 2008-2009 financial crisis to the Fed’s unprecedented responses to the economic collapse sparked by the coronavirus pandemic in 2020. In five chapters, Jacobs and King discuss the origins of the Federal Reserve System, its maneuvering to advance its capacity and autonomy to act independent of Congress and the presidency, and unprecedented support for Wall Street and big business during in the crises in 2008-2009 and 2020. Fed Power analyses how the scale of the Fed’s economic interventions since 2008 is provoking public unease, organized protests and advocacy, and congressional pressure for reform. The deadly coronavirus and the Movement for Black Lives are intensifying the push for democratic accountability, stringent regulation of banks, and new policies to reduce economic inequality and Black-White disparities. Fed Power is a corrective to both the Bank’s self-serving claims of serving the public even as it favors the best-off, and the reluctance of researchers to recognize the Fed’s role in America’s racial and economic inequalities.