Is the Fed Guilty of Treason?

By: Brian_Bloom

An important  issue that the gold lobby has raised  in the past (regarding the application of Article 1, Section 8 of the US Constitution), gave rise to a court decision that any complainant who wished to challenge the relationship of the Fed and the US Government had to have locus standi in judicio. Apparently, the reason for this was that, because of the fact that Congress must approve borrowing limits of the Federal Government, and because of the double sided bookkeeping entry that clearly links new treasury bond issuance with money creation, it was (at that time) a fact that Congress was ultimately in control of the country’s  money supply. Theoretically, if Congress had refused to raise the Sovereign borrowing limit then that would have put a stop to the Fed’s money creation.  

As I understand it, that is why the courts threw out the complaints, because only a shareholder in the Fed would have locus standi to question any alleged abuse of the relationship between the two parties (Federal Government and Federal Reserve). i.e. There was no breach of the Constitution.

Thinking about it now, I suspect that the ground has shifted. From memory, TARP was approved by Congress and therefore it was still constitutionally lawful. However, the Fed’s decision (without Congressional approval) to increase its balance sheet post-TARP is, arguably, a decision to increase the money supply of the country that is in breach of Article 1, Sec 8.  In particular, the decision to buy mortgage backed securities would need Congressional approval.  In general, the “repurchase” of an existing treasury bond may also be prohibited but this is a grey area. As I understand the law, under circumstances of the Fed’s unilateral decision to increase its balance sheet in this manner, one would not need to have locus standi to lodge a complaint. i.e. any citizen could lodge a complaint,  but I’m not sure what the charges might be.  An “act of treason” might be one of them.

Of course, Congress might pass an Act retrospectively giving the Fed permission to buy these various securities but  I’m uncertain of the legalities of this. It would be a question of constitutional law whether a historical act of treason can be “unwound” by a simple majority of Congress given that the Constitution can only be modified by a 2/3 majority of both houses and a 2/3 majority of all States. If the Constitution, once breached, can be un-breached at the stroke of a pen, then what is its value?  I suppose a “Presidential Pardon” would be all that would be necessary to save Dr Bernanke’s neck, but what about an act of treason by the Fed as an organisation? What about the Boards of Directors of the various Fed shareholder banks?

So here’s a thought: If patriotic, bi-partisan politicians genuinely want to bring “order” out of the “chaos” that is now emerging as Ben Bernanke rides into the sunset with six guns blazing trying to flood the  markets with cash and keep interest rates low at the same time, they could introduce a law that PROHIBITS retrospective approval of the Federal Reserve’s actions. In that way, Dr Bernanke would have no future wriggle room to work outside the supervision of Congress. I’m sure there are many inside both Congress and the Senate who are questioning the wisdom of injecting $85 billion fresh cash into the economy every month.  Although Dr Bernanke certainly doesn’t have unanimity even within his own Board,  he seems to be managing this by force of his personality and his position as Chairman. But let’s understand this: Effectively, as things stand, one man is deciding monetary policy for the entire country and that is certainly not mandated by the Constitution. It would be a very brave President who would veto a law that prohibits a retrospective law of this nature that has been passed by both houses – especially a President who is supposedly an expert in Constitutional Law.

Maybe this idea could be aired by people who are better qualified than I am – which is why I am circularising all of you. It’s a very fine point of law but, at face value, it might be the thin end of the wedge that could bring the loose-cannon decision makers under control. Would there be pain? Of course there would!  But that’s life, and life has a way of carrying on. And we certainly cannot carry on in this manner. Just stop and think about the implications of what happened in Cyprus over the past week end.

Brian Bloom

Author, Beyond Neanderthal and The Last Finesse

www.beyondneanderthal.com

Beyond Neanderthal and The Last Finesse are now available to purchase in e-book format, at under US$10 a copy, via almost 60 web based book retailers across the globe. In addition to Kindle, the entertaining, easy-to-read fact based adventure novels may also be downloaded on Kindle for PC, iPhone, iPod Touch, Blackberry, Nook, iPad and Adobe Digital Editions. Together, these two books offer a holistic right brain/left brain view of the current human condition, and of possibilities for a more positive future for humanity.

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