NOTE TO SELF: "Coin Money, & Regulate the Value Thereof..."

TIME FOR A RANT: Today's Republicans is very weird; in this case, deeply weird about the Federal Reserve, & deeply, deeply confused about money & banking, & the Federal Reserve's constitutional...

TIME FOR A RANT: Today's Republicans is very weird; in this case, deeply weird about the Federal Reserve, & deeply, deeply confused about money & banking, & the Federal Reserve's constitutional basis...

Digging too deep into new weird arguments about “taxation without representation”, legal tender, the Congressional power to “coin money”, central banking, and the peculiar voting structure of the FOMC, with the context being a corrupt Supreme Court majority with no guardrails and no expertise.

TL;DR: The claim that the Fed is unconstitutional because Congress can no more delegate its power to “coin money” than it could delegate its power to declare war immediately fails on the grounds of logic and reason out of its historical stupidity.

The original intention & the clear public meaning of the Constitution text is that giving Congress the power to coin money gives it the power to direct the making of coins.

At the time of the Constitution, “paper money” was a new idea, to cover the case when “the circulating notes of banks and bankers… [because of] confidence in the fortune, probity and prudence… come to have the same [circulating] currency as gold and silver money”. Such bearer obligations of banks—effectively endorsed checks—were called “paper money” as a metaphor because they had come to act like money in the payments system, not because they really were money. They were just bearer obligations of banks, the kinds of things that arise in banking business. And they were in no sense “coined” by the government, as they were issued not by the governments but by banks doing banking

Federal Reserve Notes are bearer obligations of the twelve private government-chartered corporations that are the regional Federal Reserve Banks, not “money” in the eyes of the Constitution. The Congress has chosen to make them legal tender as part of its regulatory powers. Congress’s regulatory powers cover which banks are allowed and which are not allowed to issue such bearer obligations that can function like coins. And Congress has not delegated the power to decide what is and isn’t legal tender to anyone.

But there are no real originalists, believers in plain public meaning, or textualists on the Supreme Court, are there? The majority is composed of six tame and corrupt ideologues and Professional Republicans who could decide anything, isn’t it?

---

One of the weirder things about the 2024 Michael Chea Harvard Kennedy School Macroeconomics Conference, & Larry Summers 70th Birthday Party was learning that there are Republicans who spend hours and hours debating “How can we stop the Federal Reserve from doing all the unconstitutional things it is doing?” And then learning that, in fact, there are so many of them that Dan Tarullo thinks it is time to prepare a road map to block them from using a tame and corrupt Supreme Court majority of ideologues and Professional Republicans eager to do the bidding of the party’s High Politicians to cause great chaös.

The unconstitutional things? It prints money. And it lets private bankers who are not officers of the United States—the twelve Presidents of the regional Federal Reserve Banks—perform key governmental functions. Since money is a full-faith-and-credit liability of the United States it implicitly levies future taxes. Because people who are not president-nominated and senate-confirmed vote on the FOMC, this violates the principal of no taxation without representation. And since there is an explicit constitutional requirement that it is Congress that has the power to “coin money”, the Federal Reserve cannot expand the money supply because printing money is not a power Congress can delegate.

This is all deeply confused.