Although plenty of questions are being asked about Secretary Paulson's plan granting sweeping new powers to the Federal Reserve, a crucial one is in danger of being overlooked. That question is: What use has the Fed made of past extensions of its powers? Is it reasonable, given the Fed's record, to expect it to use new powers responsibly?
The answer ought to give plan supporters second thoughts. It is that, whenever the Fed acquired new powers in the past, it abused them, often with dire consequences for the U.S. economy.
More here from George Selgin at UGA.