Elizabeth MacDonald
Fox Business
11/9/2010
Is the Federal Reserve violating the U.S. Constitution’s separation of powers with its new purchases of $600 billion worth of U.S. Treasuries? Is the Fed engaging in an unconstitutional monetization of the U.S. Congress’ out of control spending spree that is really a bridge loan to fiscal insanity?
At minimum, should the Fed be avoiding these purchases until the fiscally debauched U.S. Congress, packed to the ceiling with fiscal dipsomaniacs, follows Great Britain’s lead in its fiscal abstinence that may “out Thatcher” even Margaret Thatcher, as a top Dallas Fed official says?
Isn’t the problem fiscal incontinence and regulatory misfeasance, and business uncertainty about all of that, which is creating joblessness? Not a lack of liquidity and not deflation, which is not a clear and present danger, as instead inflation is still with us?
And isn’t the Fed dangerously habituating the stock, bond and commodities markets to a “new normal” of constant quantitative easing?
…Although Article I of the Constitution specifically gives Congress the power to “borrow,” “coin” and “regulate” money, a little understood section of the Federal Reserve Act, section 14(b)(1), does let the Fed buy Treasuries in the open market — and under the Act the central bank can buy foreign debt, too. But that act, put in place in the early part of the 20th century, was meant for smaller bore purchases to help the government build bridges and roads–not the massive intervention planned now. Fed historians fear the central bank is now pushing the envelope of the Federal Reserve Act. For more on the section, click here…
Read the entire article at Fox Business.
