A clear, textbook-style history of the founding of the Fed and an explanation of what it actually does in the money markets.” —The Washington Post
“In a refreshingly quick read, Lev Menand takes a deep look at the history of the Federal Reserve, its recent actions in times of crisis, and its future possibilities.” —Porchlight Books, editor’s choice
“A clear and cogent assessment of how the nation’s central bank might be reformed.” —Kirkus Reviews
“A fascinating and deep analysis of what has gone wrong with the American financial system. Lev Menand peels back the layers of mythology and hagiography surrounding the Federal Reserve, to reveal just another government agency that fell in love with deregulation and now struggles with the consequences. The rise and rise of the repo market is central to how a stable and well-functioning financial system became so precarious. This is a must read for anyone who cares about macroeconomic policy and the future of the global economy.” —Simon Johnson, professor at MIT Sloan, and co-author of 13 Bankers
“No American institution is more important, or more opaque to the outsider, than the Fed. Now, Lev Menand has somehow, magically, made its functioning, its history, its limitations, and its possible futures completely lucid, even for the non-mathematically inclined, and, along the way, managed to sound several alarms about the risks even the most well-meaning opaque institution presents to democracy.” —Adam Gopnik, author of A Thousand Small Sanities: The Moral Adventure of Liberalism
“Born out of the need to govern the private money supply in a democracy, the Federal Reserve System manages a marriage between the state and the banks it is designed to regulate. As Menand shows, neither partner has been able to effectively contain the other. The outcome of this ‘quixotic dance’ is The Fed Unbound. A crucial read for anybody interested in the structural causes of today’s monetary policy.” —Katharina Pistor, professor at Columbia Law School and author of The Code of Capital: How Law Creates Wealth and Inequality
“Over the past century, the Federal Reserve has grown massively in power, size and influence. Yet the reasons for this evolution, and the myriad consequences that flow from it, have often remained shrouded from view. In The Fed Unbound, Menand provides a provocative and fresh account of the Fed’s rise to one of the most important institutions of our time. The book is a must-read for anyone interested in how the government or financial markets actually work.” —Kathryn Judge, professor at Columbia Law School and author of Direct: The Rise of the Middleman Economy and the Power of Going to the Source
“Lev Menand explains that shadow banking and some newer innovations should be treated as within the private part of the monetary system, while the Fed should not be treated as an all-purpose substitute for the elected Congress. These profound propositions need urgent attention given U.S. world leadership depends on the effectiveness, integrity, and legitimacy of the Fed. Read this book.” —Paul Tucker, author of Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
“The Fed Unbound is a wonderfully lucid and provocative account of the Fed’s ever-expanding role in the U.S. and global economies. Everyone who reads Menand’s account will rethink their understanding of the Fed’s place in the U.S. economy and in the government. This book will be a landmark in the growing field of law and macroeconomics.” —Yair Listokin, professor at Yale Law School and author of Law and Macroeconomics: Legal Remedies to Recessions
”Lev Menand’s incisive analysis of the Fed’s authorities could not be timelier. The Fed Unbound demonstrates how our chronic dependency on the central banking system—and thus, private banks—has failed to benefit the broader public, even in times of crises. In a rare feat, Menand’s work not only interrogates the Fed’s power on a technical level, but points toward the reconstruction of power that should not be.” —Raúl Carrillo, Deputy Director, Law & Political Economy Project
A study of the role of the increasingly powerful Federal Reserve in fostering economic inequality.
Menand, a law professor and former Treasury official, explores the ballooning influence of the nation’s central bank. In tracing the consequences of this expansion of authority, he focuses on the institution’s response to two watershed events: the 2008 financial meltdown and the Covid-19 pandemic. As the author explains, the Fed’s ability to address these challenges was complicated by the deregulation of the banking industry over the last several decades and the rise of alternative forms of currency, and it responded by intervening in the economy in ways that deviate strikingly from its original mandate. The Fed now “fight[s] persistent economic and financial crises by using its balance sheet like an emergency government credit bureau or national investment authority—creating new money to backstop financial firms, expand financial markets, and invest in businesses and municipalities.” Menand makes a persuasive case that the Fed’s escalating interventions, which lack political oversight and are heavily influenced by wealthy stakeholders, have a direct and significant bearing on how the nation’s democracy functions. Current stimulus efforts—including so-called QE Infinity, the theoretically endless acquisition of assets—clearly benefit those who hold sizable financial assets, further polarizing the nation’s economic inequality. Menand’s recommendations point to a larger role for Congress in guiding the Fed along with the creation of so-called “automatic stabilizers,” which would take effect without special congressional directives. Another proposal is stricter supervision of “unregulated private money,” including cryptocurrencies, which pose a grave risk, Menand rightly points out, to the government’s ability to control the economy. He argues persuasively that major restructuring of the Fed would alter the “balance of power between the financial sector and the government so that our system is efficient, equitable, and inclusive.”
A clear and cogent assessment of how the nation’s central bank might be reformed.