Fed Power: How Finance Wins

by Lawrence Jacobs, Desmond King

Overview

Lawrence Jacobs and Desmond King's Fed Power is the first sustained examination of the Fed as a potent political institution that systematically provides concealed advantages to a privileged few. The authors trace the Fed's historic development from the fiery tug-of-war over monetary policy during the 19th century to its current position as the most important institution in the American economy, possessing unparalleled capacity and autonomy to intervene in private markets.

Product Details

ISBN-13:	9780197573136
Publisher:	Oxford University Press
Publication date:	03/01/2021
Edition description:	2nd ed.
Pages:	304
Product dimensions:	9.10(w) x 6.10(h) x 0.80(d)

About the Author

Lawrence R. Jacobs is Walter F. and Joan Mondale Chair for Political Studies at the Humphrey School for Public Affairs, the University of Minnesota, and co-author of both Health Care Reform and American Politics (Oxford) and Class War? (Chicago).

Desmond King is Andrew W. Mellon Professor of American Government at Oxford University and author of Making Americans (Harvard), as well as co-author of Still a House Divided (Princeton).

Table of Contents

Chapter 1: Why Fed Power Matters
Chapter 2: The Rise of the Fed State
Chapter 3: Concealed Advantage
Chapter 4: The Fed's Legitimacy Gap
Chapter 5: Preparing for the Next Financial Crisis

Editorial Reviews

"[A] careful argument for balancing sound financial management and the public interest."
—Kirkus Reviews

"[A] groundbreaking book...Fed Power represents a vibrant form of 21st century financial populism and a vital intervention in our political and social debates."
—The Huffington Post

"[Jacobs and King] use the tools of political science to examine the Federal Reserve as an institution... [and] argue that the democratic accountability of the Federal Reserve has suffered because of the bailouts. And it's completely true that the Federal Reserve pushed their powers beyond what anyone had expected... There is a lot to be impressed with in this book."
—The American Prospect

"A welcome demonstration that grounded academic work can be entertaining as well as informative. Lawrence Jacobs and Desmond King, political scientists from the universities of Minnesota and Oxford respectively, live up to their claim to 'jettison the all-too-common hermetic language of academia in favor of candor and directness'... A book that is engaging throughout and generally persuasive in its principal thesis that the Fed is a politically loaded institution that drives rising inequality."
—The Financial Times, Philip Augar

"Jacobs and King bring a political economy perspective to the debate... Recommended."—Choice Reviews

From the Publisher

2016-02-15
Who guards the guards? In the case of the Federal Reserve, a watchdog over the economy, that question has new meaning. The Fed is all that shields us from fiscal chaos, right? No. According to Jacobs (Chair, Political Studies/Univ. of Minnesota; co-author: Who Governs?: Presidents, Public Opinion, and Manipulation, 2015, etc.) and King (American Government/Oxford Univ.; co-author: Sterilized by the State: Eugenics, Race, and the Population Scare in Twentieth-Century North America, 2013, etc.), the Fed introduces its own kind of chaos by implicating too much of the economy in the machinations of the financial sector, which itself is too large a part of the economy. The Fed, "a mutant institution of government," has two fundamental charges: to keep prices stable and to maximize employment. It has taken to tending mostly to the former, "tweaking the economy during sharp downturns," when inflation is low and short-term stimuli are efficacious. In the case of the last downturn and its long-tail aftermath, the response has been to lower the interest rate to almost nothing, which does not necessarily stabilize prices. The reliance of the Fed on financial markets and its usual strategy of buying and later selling Treasury bonds means that it has become a financial player—and that numbers game, write Jacobs and King, "produces winners and losers." Given the institution's autonomy—though "not immune from intervention," the Fed successfully shook off controls imposed by Dodd-Frank—this risky behavior has become an unregulated norm. However, it was not always this way. The authors observe that public involvement in financial policy was once much greater, with widespread debate over such things as "the relatively arcane issue of whether gold or silver should backstop the dollar." While cautioning that they are not libertarian enemies of the Fed per se, they add specific recommendations for regulatory reform. Accessible and, though of interest largely to fiscal policy wonks, a careful argument for balancing sound financial management and the public interest.

Kirkus Reviews