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...
The same people who will, when you complain about our lack of one-person, one-vote institutions, lecture you on checks and balances and separation of powers now want to have Congress do what the Fed does. Because they won an election by 2%, and fear one-person, one-vote.
On rant: you're basically right but practicing law without a license can be dangerous. A few points:
1. Opinions differed--even back in the 1780's--whether paper money was or wasn't real money. There was a nice symposium on the nature of money, published in "The American Museum" in 1787. A distinction was drawn between state notes issued against future tax payments, and mercantile notes issued by banks.
2. Banks, as corporations, were viewed as parastatal enterprises in those days. (Some US banks did not incorporate, but they generally sought charters when they could get one.) The delegation problem was a hot-button political issue at the time. Debates & Proceedings of the General Assembly of Pennsylvania, On the Memorial Praying a Repeal or Suspension of the Law Annulling the Charter of the Bank (Matthew Carey, ed., Philadelphia, Seddon & Pritchard 1786). There was no doubt that they were money equivalents. Miller v. Race, 1 Burr. 452, 97 Eng. Rep. 398, 401 (K.B. 1758) (Mansfield, L.J.)
3. None of this makes a damn bit of difference, because Federal Reserve notes are issued by the federal government and guaranteed by Reserve Banks. See Sections 16(1) and 16(2) of the Federal Reserve Act. The obligation is not delegated. Never trust the Federal Reserve on the source of its powers.
4. Congress indeed has a near-monopoly on defining legal tender. (There's the gold and silver exception for the states--which means, in practical effect, that a wingnut state can abolish the sales tax for gold and silver and say it is doing something of Constitutional moment.) But legal tender doesn't mean diddly-squat. It's just a default rule of contract law, which prevents sharpsters from refusing payment because they benefit more from breach of contract. Simmons v. Swan, 275 U.S. 113 (1927). Normies don't care about legal tender, as long as what they get is safe, convenient, and liquid. Indeed, Federal Reserve and National Bank notes were not legal tender before about 1935. In the days of gold, anybody could transact around legal tender by demanding gold or gold's worth. A declaration of legal tender was a sign of monetary weakness, not strength. Charles Goodhart, The Evolution of Central Banks 20 (MIT 1988).
It was the abrogation of the gold clause that killed the gold standard, not legal tender. These days, nobody cares about legal tender. If you look at UCC Article 4A-406(b), you'll see that state law has created a legal tender of its own. This is the law governing wire transfers, and thus trillions of dollars every day. (It's been partially federalized.)
Just another note about "silver certificates". Looking at the one dollar bill, it used to say "SILVER CERTIFICATE" on the top of the bill. Now it says "FEDERAL RESERVE NOTE".
Theoretically you could take your silver certificate to the bank, maybe a federal one only?, and ask for 1$ worth of silver in exchange for your one dollar bill. I don't think anyone ever did in modern times, but the reserve system finally decided to change it to federal reserve note, probably procrastinated for a long time.
That would have been about the time that checking was very commonly used, and credit cards were just starting up. The proportion of bills and coins to the total amount circulating must have kept getting smaller.
It would be hard to grocery shop with your scraps of silver, for instance.
Precious metals, mostly gold, was used to settle debts with foreign countries. Running a trade deficit all the time would deplete the precious metal reserves.
So today there are people living on very little money, no internet, no credit card, no savings, who depend on the government to ensure that cash will be available.
perhaps the critics are desiring for more transparency into Federal Reserve operations, the contents of that beige book, explanations on the balance sheet, etc. of course the danger is that any of these line-item points can be politicized, similarly were it to be adopted into the treasury.
"Second, I was shocked by her rationale—that there were risks that inflation would rise because housing prices might be pushed up by illegal immigrants—"
It is really sad when a Fed Governor does not understand that changes in relative prices cause inflation. It is the Fed that causes and cures inflation.
Of course the idea itself is pretty common. You often hear that "supply disruptions" caused inflation.
Routinely doing things that might be acceptable in occasional extremis is par for the course of executive maximalism. I guess when norms mattered it was easier to say that something weren't, and shouldn't be, normal.
The majority of the Court has gone off in many weird directions. I know of two teachers of constitutional law who hate teaching it because the Court is now unpredictable and makes no sense.
You could consult Dean Chemerinsky at your law school about the present Court. Allen Kamp, Professor Emeritus, John Marshall Law School
The same people who will, when you complain about our lack of one-person, one-vote institutions, lecture you on checks and balances and separation of powers now want to have Congress do what the Fed does. Because they won an election by 2%, and fear one-person, one-vote.
On rant: you're basically right but practicing law without a license can be dangerous. A few points:
1. Opinions differed--even back in the 1780's--whether paper money was or wasn't real money. There was a nice symposium on the nature of money, published in "The American Museum" in 1787. A distinction was drawn between state notes issued against future tax payments, and mercantile notes issued by banks.
2. Banks, as corporations, were viewed as parastatal enterprises in those days. (Some US banks did not incorporate, but they generally sought charters when they could get one.) The delegation problem was a hot-button political issue at the time. Debates & Proceedings of the General Assembly of Pennsylvania, On the Memorial Praying a Repeal or Suspension of the Law Annulling the Charter of the Bank (Matthew Carey, ed., Philadelphia, Seddon & Pritchard 1786). There was no doubt that they were money equivalents. Miller v. Race, 1 Burr. 452, 97 Eng. Rep. 398, 401 (K.B. 1758) (Mansfield, L.J.)
3. None of this makes a damn bit of difference, because Federal Reserve notes are issued by the federal government and guaranteed by Reserve Banks. See Sections 16(1) and 16(2) of the Federal Reserve Act. The obligation is not delegated. Never trust the Federal Reserve on the source of its powers.
4. Congress indeed has a near-monopoly on defining legal tender. (There's the gold and silver exception for the states--which means, in practical effect, that a wingnut state can abolish the sales tax for gold and silver and say it is doing something of Constitutional moment.) But legal tender doesn't mean diddly-squat. It's just a default rule of contract law, which prevents sharpsters from refusing payment because they benefit more from breach of contract. Simmons v. Swan, 275 U.S. 113 (1927). Normies don't care about legal tender, as long as what they get is safe, convenient, and liquid. Indeed, Federal Reserve and National Bank notes were not legal tender before about 1935. In the days of gold, anybody could transact around legal tender by demanding gold or gold's worth. A declaration of legal tender was a sign of monetary weakness, not strength. Charles Goodhart, The Evolution of Central Banks 20 (MIT 1988).
It was the abrogation of the gold clause that killed the gold standard, not legal tender. These days, nobody cares about legal tender. If you look at UCC Article 4A-406(b), you'll see that state law has created a legal tender of its own. This is the law governing wire transfers, and thus trillions of dollars every day. (It's been partially federalized.)
Just another note about "silver certificates". Looking at the one dollar bill, it used to say "SILVER CERTIFICATE" on the top of the bill. Now it says "FEDERAL RESERVE NOTE".
Theoretically you could take your silver certificate to the bank, maybe a federal one only?, and ask for 1$ worth of silver in exchange for your one dollar bill. I don't think anyone ever did in modern times, but the reserve system finally decided to change it to federal reserve note, probably procrastinated for a long time.
That would have been about the time that checking was very commonly used, and credit cards were just starting up. The proportion of bills and coins to the total amount circulating must have kept getting smaller.
It would be hard to grocery shop with your scraps of silver, for instance.
Precious metals, mostly gold, was used to settle debts with foreign countries. Running a trade deficit all the time would deplete the precious metal reserves.
So today there are people living on very little money, no internet, no credit card, no savings, who depend on the government to ensure that cash will be available.
Really appreciate those government workers who have/had legible signatures on our money.
I remember "silver certificates". I don't remember it being a problem when switched to federal reserve note, but I was pretty young then.
O.M.G. That we are even debating this is a sign of trouble.
perhaps the critics are desiring for more transparency into Federal Reserve operations, the contents of that beige book, explanations on the balance sheet, etc. of course the danger is that any of these line-item points can be politicized, similarly were it to be adopted into the treasury.
"Second, I was shocked by her rationale—that there were risks that inflation would rise because housing prices might be pushed up by illegal immigrants—"
It is really sad when a Fed Governor does not understand that changes in relative prices cause inflation. It is the Fed that causes and cures inflation.
Of course the idea itself is pretty common. You often hear that "supply disruptions" caused inflation.
Routinely doing things that might be acceptable in occasional extremis is par for the course of executive maximalism. I guess when norms mattered it was easier to say that something weren't, and shouldn't be, normal.
The majority of the Court has gone off in many weird directions. I know of two teachers of constitutional law who hate teaching it because the Court is now unpredictable and makes no sense.
You could consult Dean Chemerinsky at your law school about the present Court. Allen Kamp, Professor Emeritus, John Marshall Law School