How Much Power Does the Federal Reserve Have?

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A review of:

How the Federal Reserve Broke the American Economy
By Christopher Leonard

As the U.S. economy bounces back from the Covid shock, we wait anxiously to see how the Federal Reserve Board will react. When will it raise rates? How fast will it unwind its trillion-dollar asset-purchase programs? With Build Back Better stalled in Congress, monetary policy is, once again, the only game in town.

In recent decades, the Fed has come to assume an ever more important place in public life. This is uncanny. There is no provision for a central bank in America’s Constitution. It has no role in the classic three-way separation of powers. Yet the question of who manages money and regulates credit is foundational for any modern society. It is not by accident that the Bank of England, the mother ship of modern central banking, dates to 1694 and the so-called Glorious Revolution, which set the British Constitution in its modern form.

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