Policy Notes No.8 01 August 2013

“Unusual and Exigent”: How the Fed Can Jump-start the Real Economy

William Greider

Though it is not widely understood, the Federal Reserve has enormous untapped power to directly stimulate or influence the flows of lending and spending that generate jobs. Doing so would fulfill the Fed’s often neglected “dual mandate”: to strive for maximum employment as well as stable money. Fed technocrats often plead that legal or technical barriers won’t allow them to do this, but their objections reflect an institutional bias that favors finance over industry, capital over labor. The central bank has abundant precedent from its own history for taking more direct actions to aid the economy. And it has ample legal authority to lend to all kinds of businesses that are not banks.

This policy note was originally published, in slightly different form, as “Can the Federal Reserve Help Prevent a Second Recession?,” The Nation, November 26, 2012. Reprinted with permission.

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Research Topics

Monetary Policy

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Monetary Policy and Financial Structure

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“Unusual and Exigent”: How the Fed Can Jump-start the Real Economy

Research Topics

Associated Programs

Related publications

Euro Interest Rate Swap Yields: A GARCH Analysis

Unconventional Monetary Policy or Automatic Stabilizers?

Monetary Policy and the Gender and Racial Employment Dynamics in Brazil

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