Hands off the Fed!

The Constitution also left the door open to be amended. Put yourself in the shoes of the Founders, why would they add text to restrict the branches to three? The issue, as I see it, is that over time the Constitution needed amending. Some were good, Prohibition was the extreme example of the bad and was duly revoked - amendments 18 and 21.

Now someone questions the status of the Fed over presidential actions using the argument that it acts as a fourth branch not prescribed in the Constitution. It’s part of the battles between the powers. The arbiter is SCOTUS.

The Captain

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We see how that ignorant conclusion worked in Venezuela.

Lipstick on a pig.

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Oh good. They are really trying to mess with the banking system in America…

Fed’s Barr Says Trump-Era Big Bank Deregulation Leaves Community Banks Exposed To Fallout

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In May the Supreme Court found it likely “that both the NLRB and MSPB exercise considerable executive power” and therefore the restrictions on the president firing them were likely going to be found unconstitutional.

And this week…

DC appeals court backs firing of independent agency Democrats
https://www.politico.com/news/2025/12/05/d-c-appellate-backs-wh-firing-of-nlrb-mspb-dems-00678594
The Supreme Court is set to hear arguments Monday in a case [Trump v. Slaughter] involving Trump’s removal of a Biden appointee from the Federal Trade Commission, challenging a 90-year-old precedent that had served as the legal foundation for certain agencies to stand apart from the White House.

Several conservative justices appear willing to revisit that decision — known as Humphrey’s Executor — which has upheld Congress’ power to afford agencies a degree of autonomy.

DB2

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Quite besides the stealth grooming and McConnelling of SCOTUS and its aftermath, the entire Constitutional order is now on quicksand, as the technology and workings of “the Press” and “the Public” that were formost in the founders’ minds no longer exists (speech is money is speech).

The Republic is in need of some deep intensive thinking and reinvention no matter what.

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The Fed is not a branch, it is an agency, one of many: A-Z index of U.S. government departments and agencies | USAGov

Heads of agencies are appointed and removed as provided by law. The executive power of appointments is shared between the president and the senate. By extension, the power of removal is shared, as Justice Story wrote “removal takes place in virtue of the new appointment”. Justice Story warned about an unlimited executive power of removal:

“Indeed, it is utterly impossible not to feel, that, if this unlimited power of removal does exist, it may be made, in the hands of a bold and designing man, of high ambition, and feeble principles, an instrument of the worst oppression, and most vindictive vengeance.”

But, the current Supreme Court will likely accept the unitary executive theory, removing Congress’s role in setting reasons for removal, and transferring unlimited power to the President.

==== links ====

Joseph Story, Commentaries on the Constitution, 1833
"It is observable, that the constitution makes no mention of any power of removal by the executive of any officers whatsoever. … Hitherto the latter has remained a merely speculative question, as all our legislation, giving a limited duration to office, recognises the executive power of removal, as in full force.

The other is a vastly important practical question; and, in an early stage of the government, underwent a most elaborate discussion. The language of the constitution is, that the president “shall nominate, and, by and with the advice and consent of the senate, appoint,” &c. The power to nominate does not naturally, or necessarily include the power to remove; and if the power to appoint does include it, then the latter belongs conjointly to the executive and the senate. In short, under such circumstances, the removal takes place in virtue of the new appointment, by mere operation of law. It results, and is not separable, from the appointment itself.

This was the doctrine maintained with great earnestness by the Federalist; and it had a most material tendency to quiet the just alarms of the overwhelming influence, and arbitrary exercise of this prerogative of the executive, which might prove fatal to the personal independence, and freedom of opinion of public officers, as well as to the public liberties of the country. Indeed, it is utterly impossible not to feel, that, if this unlimited power of removal does exist, it may be made, in the hands of a bold and designing man, of high ambition, and feeble principles, an instrument of the worst oppression, and most vindictive vengeance. Even in monarchies, while the councils of state are subject to perpetual fluctuations and changes, the ordinary officers of the government are permitted to remain in the silent possession of their offices, undisturbed by the policy, or the passions of the favourites of the court. But in a republic, where freedom of opinion and action are guaranteed by the very first principles of the government, if a successful party may first elevate their candidate to office, and then make him the instrument of their resentments, or their mercenary bargains; if men may be made spies upon the actions of their neighbours, to displace them from office; or if fawning sycophants upon the popular leader of the day may gain his patronage, to the exclusion of worthier and abler men, it is most manifest, that elections will be corrupted at their very source; and those, who seek office, will have every motive to delude, and deceive the people. It was not, therefore, without reason, that, in the animated discussions already alluded to, it was urged, that the power of removal was incident to the power of appointment. That it would be a most unjustifiable construction of the constitution, and of its implied powers, to hold otherwise. That such a prerogative in the executive was in its own nature monarchical and arbitrary; and eminently dangerous to the best interests, as well as the liberties, of the country. It would convert all the officers of the country into the mere tools and creatures of the president. A dependence, so servile on one individual, would deter men of high and honourable minds from engaging in the public service. And if, contrary to expectation, such men should be brought into office, they would be reduced to the necessity of sacrificing every principle of independence to the will of the chief magistrate, or of exposing themselves to the disgrace of being removed from office, and that too at a time, when it might no longer be in their power to engage in other pursuits."

Morrison v. Olson and the triumph of the unitary executive theory, Dec 3, 2025
"Rarely has a solo dissent in a Supreme Court case eventually triumphed, but that is likely to happen as a majority of the justices appear poised to accept the “unitary executive theory” of presidential power. This is the view that the president has authority over the entire executive branch of government, including the ability to fire heads of agencies and any such government employees.

But it should be remembered that when the court considered the unitary executive theory in the 1988 case of Morrison v. Olson, the justices, by a vote of 7-1, emphatically rejected it. Only Justice Antonin Scalia dissented and embraced it. His view is now likely that of the six conservative justices on the Supreme Court and may be adopted when the court considers two cases this term concerning presidential removal power: Trump v. Slaughter and Trump v. Cook.

The court in Morrison also rejected the argument that the Ethics in Government Act violated the separation of powers. In disagreeing with the unitary executive theory, Rehnquist wrote, “we have never held that the Constitution requires that the three branches of Government ‘operate with absolute independence,’” and that “this case does not involve an attempt by Congress to increase its own powers at the expense of the Executive Branch.”

Only Scalia dissented. In his opinion, Scalia expressly embraced the unitary executive theory. He invoked the language of the vesting clause of Article II of the Constitution: Scalia said “this does not mean some of the executive power, but all of the executive power.”"

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Mom and Dad send money is more like it. Meanwhile tax hikes are not on the table.

You can take that documents. You can take the chambers. You can take the branches.

But don’t default on the debt! That would end SS, Medicare, Medicaid, and the FDIC insurance!

No way! Way?

OFW

That’s the orthodox narrative. Reality might be something else.

The Captain

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Sure, maybe a small branch. Independent central banking is what works in modern economies. The alternative is a boom and bust cycle that leads to major depressions every 50 years.

Modern Central Banks that actively manage the economy are 20th century creations:
United States (Federal Reserve, 1913)
Canada (Bank of Canada, 1934)
Germany (Bundesbank, 1957)
United Kingdom (Bank of England, operational independence 1997)
Eurozone (ECB, 1998)
Japan (Bank of Japan, formal independence 1998)

Congress created the FOMC in the 1930s, because the Federal Reserve Act of 1913 was viewed as a failure after the disaster of the Great Depression.

(The U.S. Constitution does not explicitly list what we see now as a modern central bank. Hamilton fought to establish a National Bank, arguing that Congress could do so using implied powers to “coin Money, regulate the Value thereof”. But the First Bank of the United States was controversial, and the charter expired in 1811.)

Congress created and updated the Federal Reserve as ideas were tested and the economy changed. The US Constitution is short, with many of the phrases subject to interpretation. It was created in an uncertain time of a new nation forming, and was not uniformly well-received by the people debating it. There were many compromises, and many things left to figure out later. The idea was to sketch out the basics, and let the details emerge later.

“compared to many existing national constitutions (e.g. the 4,600 word US Constitution), the European Constitution is very long, at around 265 pages and over 60,000 words in its English text.”
https://www.ccbe.eu/NTCdocument/constitution_for_eur1_1183985861.pdf

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There could be more turmoil ahead. Regional Fed bank presidents serve five-year terms, and all 12 are up for reappointment in February 2026.

How the Fed losing its independence could affect Americans’ everyday lives, August 31, 2025
"While the reserve banks’ boards choose their presidents, the Fed board in Washington can vote to reject them. All 12 presidents will need to be reappointed and approved by the board in February, which could become more contentious if the board votes down one or more of the 12 presidents.

“The nuclear scenario is … the reappointment of the reserve bank presidents and interfering with that, (which) would be the signal that things are truly going off the rails,” said Adam Posen, president of the Peterson Institute for International Economics."

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I put this question into the AI arena:
What happened when central banks were politically controlled?

The 2 AIs used different examples, but reached the same conclusion: political control leads to economic crisis.

(I happened to get 2 gemini AIs. The answer from the newer gemini-3-pro was about 4000 words, while the answer from gemini-2.5-pro was about double in length with about 8000 words. Both answers were good, but quite different from each other.)

gemini-3-pro
The consistent pattern across 100+ years and 50+ countries
When politicians gain direct control over the central bank, the outcome is almost always the same:
Short-term sugar rush → Chronic high inflation → Currency collapse → Economic crisis

gemini-2.5-pro
The lesson learned across the 20th century was clear: For stable prices and sustainable growth, central banks need to be insulated from short-term political pressures.

When Central Banks Are Politically Controlled Consequence
Policy driven by election cycles Artificial booms & busts
Monetizing government debt Chronic/high inflation
Lack of credibility Higher market interest rates, currency depreciation
Frequent changes in policy direction Unpredictability, poor planning
Reluctance to raise rates Delayed action → severe crises

gemini-3-pro examples:
Germany 1921–1923
United Kingdom 1945–1979
United States 1942–1951
Latin America 1960s–1990s
Turkey (2018–present)
Argentina (2007–2023)
Venezuela (2000s–present)

gemini-2.5-pro examples:
The “Barber Boom” (UK, 1972)
Historical Example: The 1970s Stagflation (US & Globally)
Weimar Germany (1920s)
Zimbabwe (2000s)
Latin American Debt Crisis (1980s)
Result: Countries that granted independence to their central banks (e.g., UK after the 1997 Bank of England Act, Eurozone countries, New Zealand, Canada) generally saw lower and more stable inflation in the decades that followed.

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