How the Fed Ignored the Constitution and Played Favorites During Crisis

Jacobs, co-author of new book, says Fed has lost legitimacy, credibility

by Greg Robb
Market Watch

WASHINGTON (MarketWatch) — The Fed does what it wants and plays favorites. And as a result it’s lost the trust of the American people.

That is the stark view the central bank’s actions in the wake of the financial crisis by Lawrence Jacobs, a public policy expert at the University of Minnesota.

In a new book, “Fed Power, How Finance Wins,” Jacobs, and his co-author Desmond King from Oxford University, lay out their case that the Fed managed to overstep the U.S. constitution by taking giving trillions of dollars in loans to financial market participants. These actions should have been reserved for Congress and offended Main Street, he said. “Elites” in Washington and New York went along with the central bank’s actions believing basically the ends justified the means, they argue.

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