David Trenton: If this goes wrong, we'll blame it on the cook.
Tom Breaker: Absolutely.
--Under Seige
Toward the end of this interview, Jim Grant provides one argument for the ludicrous claim that the Fed must be independent. The Constitution assigns the power to "coin money" to Congress. Congress has essentially abdicated their responsibility by outsourcing money production to the Federal Reserve.
By placing it in the hands of the legislature, the founders were saying that management of the money supply is political. If people do not like the job that Congress does with the money supply, then voters can 'vote the rascals out.'
Like so many other areas, Congress is trying to lay off responsibility for money production to some other entity. By claiming that the Fed is an 'independent agency,' then Congress thinks it can wash its hands of money related problems. The Fed becomes the scapegoat.
What people do not seem to understand is that this scapegoat is out of the direct influence of voters.
Congress is constitutionally responsible for the money supply. If this is no longer desirable, then the people must speak via the Constitution amendment process.
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Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. It was the largest corporation in the country and was dominated by big banking and money interests. Many agrarian minded Americans uncomfortable with the idea of a large and powerful bank opposed it. When the bank’s 20-year charter expired in 1811 Congress refused to renew it by one vote.
~federalreserveeducation.org
By 1816, the political climate was once again inclined toward the idea of a central bank; by a narrow margin, Congress agreed to charter the Second Bank of the United States. But when Andrew Jackson, a central bank foe, was elected president in 1828, he vowed to kill it. His attack on its banker-controlled power touched a popular nerve with Americans, and when the Second Bank’s charter expired in 1836, it was not renewed.
~federalreserveeducation.org
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