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Quote by Gerald Epstein

“The Fed has a lot of power in the economy because it has a big impact on the supply and cost of credit, that is, interest rates. It also plays a key role in supervising banks and historically has seemed to take it easy on the banks when it shouldn't have, such as in the lead up to the financial crisis.”

Quote by Gerald Epstein

Author

Gerald Epstein, born on November 6, 1935, is an accomplished author known for his diverse literary works and profound insights. His writing is characterized by its depth of emotion and imagination. more

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“Critics, often for good reason, are concerned that the Fed is wielding its vast powers in the interests of the banks and not in the interests of the people. After the financial crisis, Americans have perceived that the banks have been bailed out, but a significant proportion of the population is still in serious economic trouble.”

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“Many of those on the right distrust the Fed and want to eliminate its power in the belief that the private economy, including the private banks, will be much more efficient, productive and even democratic if they are left to themselves: in other words, the criticism of the Fed really reflects a desire to cripple the government in the service of increasing the power and authority of the market.”

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“Most progressive critics don't want to destroy the power of the Fed to regulate the macroeconomy and finance. They want to regain control over it so that it better serves the interests of the whole population.”

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“The right wants to destroy the power of the Fed to increase the power of finance; and the progressives want to reorient the Fed so that it will stop protecting the interests of finance and protect the interests of the broader population instead.”

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“There is no doubt that the Fed's large-scale asset purchases have caused major increases in a number of asset prices in the economy. This is especially true of mortgage backed securities and corporate bonds, and quite possibly of equities as well. For those people and institutions holding those things, the run up in prices has been a wealth bonanza.”

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“The impact of QE on generating more lending by Wall Street to Main Street and in generating more employment and increasing overall investment in the economy is quite modest. QE probably limited the initial collapse of the economy in 2008, and likely had a very small positive impact on economic growth, but its broader impact on jobs and growth in the economy seems not very big.”

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“Initially, QE contributed to a pretty significant increase in inequality. It raised asset prices, which are owned primarily by the wealthy, while having relatively small if any positive impacts on bank lending, employment, wages or economic growth, so ordinary people haven't had much help. By the third round of QE in 2012-2014, the effects had likely muted quite a bit. There were probably not big impacts on asset prices from QE and the positive effects on employment growth might have strengthened somewhat.”

“QE and other aspects of Fed policy increased inequality pretty significantly. This is reinforced if you take into account all the other non-standard measures the Fed used to bail out the banks early on in the [2008] crisis.”

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