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How does the fed exist then, if not through executive power? The 10th amendment only allows the federal government to exercise powers expressly granted in the

How does the fed exist then, if not through executive power? The 10th amendment only allows the federal government to exercise powers expressly granted in the constitution.

mpalmer 1y ago
At bottom it's kind of a kludge, which the US has unfortunately waited until now to test in the courts. There are a lot of reasons why letting the executive control the Fed would be massively destabilizing. None of those reasons go to the constitutionality of the matter, so courts have generally chosen to sort of handwave it - and the executive hasn't really forced the issue. Won't be able to depend on those factors much longer...
- rayiner 1y ago
  The US has had a nationally bank since before the constitution was adopted: https://en.wikipedia.org/wiki/First_Bank_of_the_United_States https://en.wikipedia.org/wiki/First_Bank_of_the_United_State.... The U.S. has had a central bank that controls inflation by performing market operations since 1811: https://en.wikipedia.org/wiki/Second_Bank_of_the_United_States https://en.wikipedia.org/wiki/Second_Bank_of_the_United_Stat.... The core concept of a central bank that influences the economy through its transactions with other banks has a lengthy constitutional pedigree. It predates the 20th century precedent on “independent federal agencies” by 120 years or so.
  - mpalmer 1y ago
    If some institution predating and then coexisting with the Constitution is enough to grant it a constitutional pedigree, there's a whole lot of other nonsense that would qualify. More to the point, this doesn't address anything of substance from the discussion above. No one is arguing there shouldn't be a central bank, or that there's no textual/legal support for one.
rayiner 1y ago
Yes, but Article I, Section 8 says: “[The Congress shall have Power . . . ] To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” McCulloch v. Maryland held that was broad enough to encompass chartering a federal bank: https://www.oyez.org/cases/1789-1850/17us316 https://www.oyez.org/cases/1789-1850/17us316. Now, you have a point that it’s hard to see what enumerated power is served by creating a national bank. But I think it fairly falls within the enumerated power of providing for “the common defense and general welfare of the United States.” Remember, the huge issue at the time was how to pay for the military and what to do with all the war debt states had taken on. The first national bank was created to deal with that. So the central bank fit into the concept of the “general welfare of the United States” in a much more specific way than is usually imagined. That is to say, it doesn’t require a strained reading of “general welfare of the United States” that would be broad enough to basically gut the concept of enumerated powers. Instead, at the time, the management of the nation’s finances was seen as an existential threat to the new government as a whole.
- mothballed 1y ago
  I think the issue there is article I, unlike article II, expressly states what the legislative branch consists of. And it states it consists of the house and the senate. Nothing else. So the reading of a bank that excecutes the law establishing it, I don't know how it could fall under anything but article ii. From your explanation, that wouldn't violate McCulloch v. Maryland authorization of the executive to execute the law.
  - rayiner 1y ago
    Oh, I see what you’re saying. Article I, II, and III, create “Congress,” the “President,” and the “Supreme Court.” Those are the constitutional organs of the government, and are invested with the legislative, executive, and judicial powers, respectively. The constitution assumes you can create various offices and departments associated with each of these organs, without spelling it out. But nothing turns on where anything “sits.” The question is whether any entity is exercising the “executive power,” or “legislative power,” or “judicial power.” For example, one of the first things Congress did in 1789 was to create the Marshall’s Service to provide security to courts. These were actually created as a body in the judicial branch. https://en.wikipedia.org/wiki/United_States_Marshals_Service https://en.wikipedia.org/wiki/United_States_Marshals_Service. But they don’t exercise the “judicial power.” They exercise executive power—law enforcement. So the Fed “sits” in the executive branch. But that doesn’t necessarily mean it exercises the “executive power” within the meaning of Article I, Section 1.
throw0101d 1y ago
> How does the fed exist then, if not through executive power? First, the Fed is not entirely government, as chartered banks are shareholders. Second, the Fed is / can be construed under 'power of the purse', which is under the jurisdiction of Congress.
- mothballed 1y ago
  Article I expressly states the legislative branch "consist of a Senate and House of Representatives." So the fed can't be part of the legislative branch.
  - throw0101d 1y ago
    Agencies can exist under the bailiwick of Congress, e.g.: * https://en.wikipedia.org/wiki/Congressional_Budget_Office https://en.wikipedia.org/wiki/Congressional_Budget_Office Further, having a bank that is not directly controlled by Government dates back to the first Congress (Washington, Hamilton): > The suspicion of this would most probably be a canker, that would continually corrode the vitals of the credit of the Bank, and would be most likely to prove fatal in those situations, in which the public good would require, that they should be most sound and vigorous. It would indeed be little less, than a miracle, should the credit of the Bank be at the disposal of the Government, if in a long series of time, there was not experienced a calamitous abuse of it. It is true, that it would be the real interest of the Government not to abuse it; its genuine policy to husband and cherish it with the most guarded circumspection as an inestimable treasure. But what Government ever uniformly consulted its true interest, in opposition to the temptations of momentary exigencies? What nation was ever blessed with a constant succession of upright and wise Administrators? * https://founders.archives.gov/documents/Hamilton/01-07-02-0229-0003 https://founders.archives.gov/documents/Hamilton/01-07-02-02...
    - mothballed 1y ago
      Alright, you have a point here, as rayiner also pointed out. The legislative powers more accurately are vested in only congress and senate, and not only that are defined as consisting of the house and senate. Therefore the CBO exists in a rather odd area, where it cannot exercise any power unless it moves into the execute branch, or it somehow uses executive power.
ajross 1y ago
The fed exists through its charter by Congress in the Federal Reserve Act of 1913. Clearly congress gets to define organs of government by law, no one seriously tries to make a 10th amendment case that Congress can't define organs of government. The argument here is about independence. Can Congress define an organ of government (part of the executive branch as commonly understood) such that the president doesn't have the ability to directly administer it? Or is the president the head of all executive authority? Similarly no one doubts that the intent of Congress was to do so here. And almost everyone thinks this has been a good thing, as macroeconomic policy can and has done terrible things in the hands of political actors in the past. But the constitution is silent, thus the case.

How does the fed exist then, if not through executive power? The 10th amendment only allows the federal government to exercise powers expressly granted in the constitution.

mpalmer 1y ago

At bottom it's kind of a kludge, which the US has unfortunately waited until now to test in the courts. There are a lot of reasons why letting the executive control the Fed would be massively destabilizing. None of those reasons go to the constitutionality of the matter, so courts have generally chosen to sort of handwave it - and the executive hasn't really forced the issue. Won't be able to depend on those factors much longer...

rayiner 1y ago
The US has had a nationally bank since before the constitution was adopted: https://en.wikipedia.org/wiki/First_Bank_of_the_United_States https://en.wikipedia.org/wiki/First_Bank_of_the_United_State.... The U.S. has had a central bank that controls inflation by performing market operations since 1811: https://en.wikipedia.org/wiki/Second_Bank_of_the_United_States https://en.wikipedia.org/wiki/Second_Bank_of_the_United_Stat.... The core concept of a central bank that influences the economy through its transactions with other banks has a lengthy constitutional pedigree. It predates the 20th century precedent on “independent federal agencies” by 120 years or so.
- mpalmer 1y ago
  If some institution predating and then coexisting with the Constitution is enough to grant it a constitutional pedigree, there's a whole lot of other nonsense that would qualify. More to the point, this doesn't address anything of substance from the discussion above. No one is arguing there shouldn't be a central bank, or that there's no textual/legal support for one.

rayiner 1y ago

Yes, but Article I, Section 8 says: “[The Congress shall have Power . . . ] To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” McCulloch v. Maryland held that was broad enough to encompass chartering a federal bank: https://www.oyez.org/cases/1789-1850/17us316 https://www.oyez.org/cases/1789-1850/17us316. Now, you have a point that it’s hard to see what enumerated power is served by creating a national bank. But I think it fairly falls within the enumerated power of providing for “the common defense and general welfare of the United States.” Remember, the huge issue at the time was how to pay for the military and what to do with all the war debt states had taken on. The first national bank was created to deal with that. So the central bank fit into the concept of the “general welfare of the United States” in a much more specific way than is usually imagined. That is to say, it doesn’t require a strained reading of “general welfare of the United States” that would be broad enough to basically gut the concept of enumerated powers. Instead, at the time, the management of the nation’s finances was seen as an existential threat to the new government as a whole.

mothballed 1y ago
I think the issue there is article I, unlike article II, expressly states what the legislative branch consists of. And it states it consists of the house and the senate. Nothing else. So the reading of a bank that excecutes the law establishing it, I don't know how it could fall under anything but article ii. From your explanation, that wouldn't violate McCulloch v. Maryland authorization of the executive to execute the law.
- rayiner 1y ago
  Oh, I see what you’re saying. Article I, II, and III, create “Congress,” the “President,” and the “Supreme Court.” Those are the constitutional organs of the government, and are invested with the legislative, executive, and judicial powers, respectively. The constitution assumes you can create various offices and departments associated with each of these organs, without spelling it out. But nothing turns on where anything “sits.” The question is whether any entity is exercising the “executive power,” or “legislative power,” or “judicial power.” For example, one of the first things Congress did in 1789 was to create the Marshall’s Service to provide security to courts. These were actually created as a body in the judicial branch. https://en.wikipedia.org/wiki/United_States_Marshals_Service https://en.wikipedia.org/wiki/United_States_Marshals_Service. But they don’t exercise the “judicial power.” They exercise executive power—law enforcement. So the Fed “sits” in the executive branch. But that doesn’t necessarily mean it exercises the “executive power” within the meaning of Article I, Section 1.

throw0101d 1y ago

> How does the fed exist then, if not through executive power? First, the Fed is not entirely government, as chartered banks are shareholders. Second, the Fed is / can be construed under 'power of the purse', which is under the jurisdiction of Congress.

mothballed 1y ago
Article I expressly states the legislative branch "consist of a Senate and House of Representatives." So the fed can't be part of the legislative branch.
- throw0101d 1y ago
  Agencies can exist under the bailiwick of Congress, e.g.: * https://en.wikipedia.org/wiki/Congressional_Budget_Office https://en.wikipedia.org/wiki/Congressional_Budget_Office Further, having a bank that is not directly controlled by Government dates back to the first Congress (Washington, Hamilton): > The suspicion of this would most probably be a canker, that would continually corrode the vitals of the credit of the Bank, and would be most likely to prove fatal in those situations, in which the public good would require, that they should be most sound and vigorous. It would indeed be little less, than a miracle, should the credit of the Bank be at the disposal of the Government, if in a long series of time, there was not experienced a calamitous abuse of it. It is true, that it would be the real interest of the Government not to abuse it; its genuine policy to husband and cherish it with the most guarded circumspection as an inestimable treasure. But what Government ever uniformly consulted its true interest, in opposition to the temptations of momentary exigencies? What nation was ever blessed with a constant succession of upright and wise Administrators? * https://founders.archives.gov/documents/Hamilton/01-07-02-0229-0003 https://founders.archives.gov/documents/Hamilton/01-07-02-02...
  - mothballed 1y ago
    Alright, you have a point here, as rayiner also pointed out. The legislative powers more accurately are vested in only congress and senate, and not only that are defined as consisting of the house and senate. Therefore the CBO exists in a rather odd area, where it cannot exercise any power unless it moves into the execute branch, or it somehow uses executive power.

ajross 1y ago

The fed exists through its charter by Congress in the Federal Reserve Act of 1913. Clearly congress gets to define organs of government by law, no one seriously tries to make a 10th amendment case that Congress can't define organs of government. The argument here is about independence. Can Congress define an organ of government (part of the executive branch as commonly understood) such that the president doesn't have the ability to directly administer it? Or is the president the head of all executive authority? Similarly no one doubts that the intent of Congress was to do so here. And almost everyone thinks this has been a good thing, as macroeconomic policy can and has done terrible things in the hands of political actors in the past. But the constitution is silent, thus the case.