Thomas Palley

Thomas Palley was formerly chief economist of the US-China Economic and Security Review Commission. Prior to joining the Commission, he was director of the Open Society Institute’s Globalization Reform Project, and before that assistant director of public policy at the AFL-CIO. He is the author of Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism (Princeton University Press) and Post Keynesian Economics (Macmillan Press).

Recent Articles

The Fed and Crony Capitalism

The Federal Reserve's response to the current fiscal crisis raises grave questions about its independence and judgment. It is time for Congress to launch formal hearings into the governance of the Fed.

In an attempt to stop the rot on Wall Street, the Federal Reserve recently granted special borrowing rights to Wall Street’s largest investment banks. That decision smells of special dealing for special interests. The decision subsidizes these big powerful firms, thereby distorting financial markets in their favor. Behind the decision lies the problem of excessive representation of Wall Street interests within the Fed. The Fed's response to the crisis, combined with its earlier massive policy failure to address the housing price bubble, raise grave questions about its independence and judgment. At this stage, Congress should launch formal hearings into the governance of the Fed, which has remained largely unchanged since the 1930s. The subsidy to the big investment banks operates though the Fed’s new Primary Dealer Credit Facility (PDCF) that gives investment banks who deal in government bonds access to cheap Fed funds. As a result, the chosen few can borrow money from the...

Chairman Greenspan Wants Your Job

F or the past year and a half, the stewards of the American economy have been worrying that too many Americans are drawing regular paychecks. The fear is never quite put that way, of course, but as the national unemployment rate has dropped to 4 percent, the Federal Reserve has been getting restive. Six times in 15 months, the governors of the Federal Reserve Board have voted to raise interest rates, which is their way of saying the economic news is a little too good. The goal of this monetary tightening is to brake the economy, ideally bringing it to a "soft landing" of slower growth without recession. So far, under the leadership of Chairman Alan Greenspan, the Fed is moving cautiously, trying not to trigger an outright recession. Yet there are signs that higher interest rates are having some effect. Before this summer, national employment was increasing by an average of 251,000 jobs per month. In July and August, employment decreased by an average of 78,000 jobs. Since it takes...