Ranting to /dev/null

A currency that has lost 95% of its value in less than a hundred years is not what I would describe as successful. A system that permits people to create as much money as they want, out of thin air, without having to bear the consequences of such actions, is also not a system that I would call successful, or even prudent. A system that allows a single person to arbitrarily decide how much supply of money is the exact proper amount is not a good system (that's what Hayek called the fatal conceit, the arrogant idea that a single person could ever possibly know exactly how much supply is needed for a good outside the natural bounds of the market). All of these reasons are probably why the US Constitution does not permit Congress to operate a central bank, which is what the Federal Reserve is. So even if you do think it is a good idea, then shouldn't we at least do so legally?

A system that requires government officials to live within their means, to finance all spending with taxes, and spend no more than they bring in, would be much better, and certainly more fiscally sane. Some people think that some form of a "gold standard" would accomplish that, and others don't. It's a topic that ought to be debated. What ought to be so objectively obvious so as to be beyond debate is the fact that socialism does not work. And a central bank, which is founded on the idea that a single central planner ought to declare by fiat the supply of a good (money) is as socialist an institution as you can find.

Yes, I do think that fiat money is a good idea, and yes, the Constitution does permit Congress to operate a bank. M'Colloch v. Maryland, 17 U.S. 316 (1819). That case is almost 200 years old. This is settled law. You don't get to object to this.

You then make a policy argument about prohibiting deficit spending. In general, I'm opposed to the government spending more than it generates in taxes, but I do recognize that, like a consumer household, credit is useful and appropriate. Either way, the Constitution mandates that the credit of the federal government is beyond question, specifically allowing the federal government to borrow money. You have a beef with that, you can complain to Washington and Jefferson, because apparently they thought it was a good idea.

You also equate central banks with socialism. You continue to misunderstand the kind of thing that money is. Money is not a good. Money is a standardized medium of exchange. This is pseudo-paranoid anti-government reactionism, not sound economic theory. History manifestly demonstrates that fiat money is the most effective means of managing a currency. Only ignoring 6,000 years of monetary evolution can lead to any other conclusion.

Ryan, this is obviously going nowhere. Central banking and fiat currencies have proven only one thing throughout history: that it's the only sure-fire way to destroy a nation's economy. Central banking is not just the newest, greatest progression in monetary theory. It's the opposite. Since its inception, as Hayek pointed out, there has not been a single innovation in money. We live in a sinful world, and rulers have always found ways to debase their currencies and muck around with the money supply in their economies for their own benefit. Central banking is not a natural, market-driven concept. In the US, some central government agency has imposed fiat currency and forced people to use it since 1775.

And you're still wrong about money. A paper bill is not money. It is an IOU that, at one time, represented a precise weight of gold, which was the real money. Paper bills did not replace the money, they were just more convenient than carrying gold around. We treat paper bills as "money" not because they are, but because the federal government declares that it has value and forces us to use it as if it were money. Without that decree, it would be nothing more than what it really is: pieces of paper.

One further question: if money is not a good, then why is there a demand for it? Not only is it a good, it's the most important good in an economy. If you want to argue that it's not a good, then you have to prove what the difference is between money and any other good available in the marketplace.

You're right: this isn't going any where. But the reason is because you're equivocating on "money". You have established no consistent usage of the term, nor, in fact, provided any real definition. I have. The definition I have offered is that it is a standardized medium of exchange, nothing more, nothing less, that need not be tied to any particular physical substance or product.

Come up with a definition of your own or for the love of all that's rational, stop telling me that fiat money is evil. The way you're using it is logically equivalent to saying that fhwqgads are evil. Even your own economist Mises has real defintions of money and describes three different kinds: commodity, fiat, and credit. You, on the other hand, have provided not any working definition whatsoever, and have not used the word in a way that such a definition could be deduced.

But there's a more basic problem here: your arguments are silly. This issue is not seriously discussed by serious people anymore. We have been using fiat money for a long, long time, but it replaced other forms of exchange centuries ago (and far before AD 1775, I assure you). If you aren't willing to admit historical evidence into the conversation--and you patently are not--then this conversation is truly over.

Money, obviously, has to be divisible, durable, and transferable. It has to be some object that people value for its qualities as a medium of exchange. It is obviously a real good, because it responds to the laws of supply and demand the same way that any other good does. If you oversupply money, then you get a surplus, and the price of it decreases (through lower interest rates). If you undersupply it, then you get a shortage, and the price increases (through higher interest rates). I happen to believe that the best way to ensure that the supply meets the demand is to allow the open market to provide it, not to manage it through central planning.

And I hope you realize that arguing that fiat money is the next greatest, best thing, and that it replaced the gold standard (which, by the way, we were never truly on to begin with) as the best form of monetary policy is what, to me, sounds senseless. If fiat money were truly what people wanted, and if it were truly the best monetary policy, then it would not have to be forced on us at gun point (and if you don't believe that, try opening up a store and accepting payment from customers in gold). The very fact that we have legal tender laws, and the very fact that our government has to force people to use fiat currency is proof that people didn't choose it voluntarily, that it's not a product of the free market, and that it's not in our best interests to use it.

By the way, it is unconstitutional for Congress to charter a central bank. I am aware of the fact that there is a law permitting them to do so. My point however was that it is unconstitutional, because Congress is not given that power in the constitution. Congress only has the power to do that which is expressly given to it in the constitution. Making a law that directly contradicts the constitution does not make it constitutional. I realize that flies in the face of modern legal theory, which posits that the constitution is not the actual constitution, but that the constitution is actually the summation of all judicial decisions regarding how we are to interpret the constitution. So yes, you can argue that Congress has the legal authority to charter a central bank, because there is a law allowing it to do so. But to make that argument, you are re-defining the constitution to mean something that it most definitely, clear as day, does not say.

1) You've described some of the things that money does but not what it in fact is. This is clearly a step in the right direction, but if you'll notice, there's nothing in the definition you've provided that precludes fiat money. Simply tack on the idea that the value of fiat money is in paying debts to the government, and your objections should largely dissolve. You've made an ideological argument that uncenteralized, non-fiat money is better, but that's all. Still not going anywhere.

2) Your argument about fiat money being based on coercion is frivolous. Of course it is. It wouldn't be "fiat" money otherwise. That doesn't mean that this isn't a market solution, however. Furthermore, you misunderstand the legal tender doctrine. US currency--not US money--is legal tender for all "debts". See here.

If you decide to open a convenience store that only accepts gold, you're permitted to do this. You still have to pay your taxes in US dollars, and gold isn't exactly a convenient method of payment, but it's allowed. You will, however, go out of business because gold is not a convenient medium of exchange the way fiat money is.

There are actually trendy communities in New England that circulate private local currencies in an effort to encourage local spending. A town will do something like offer 1.10 in local currency for $1 and local businesses will accept the money as cash as a way of giving a discount to people who don't shop at Wal-Mart. This is permitted.

3) In re the legality of the Fed, you really, really don't get it. I'm not "redefining the Constitution". You are. The Supreme Court specifically held in M'Culloch that the Constitution permits Congress to charter a bank. This is a function of the Necessary and Proper Clause supporting the Commerce Power. Read Art. I, § 8.

Your interpretation of the Constitution conflicts with 192 years of Supreme Court constitutional jurisprudence, and is therefore wrong. If you don't like this, I'll just cite Marbury. Your "strict-constructionist" views notwithstanding, no one, and I mean no one seriously contests either of those cases anymore as they are the foundation of American jurisprudence. If you disagree with these, you aren't part of any conversation worth having and have relegated yourself--as I have already suggested--to the lunatic fringe of crackpots and conspiracy theorists.

But that even isn't the issue. Here's a direct quote from Art. I, § 8: "Congress shall have power.... To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." Congress may issue money as it sees fit based upon whatever value it sees fit. This could be gold. This could be silver. This could be simply the faith and credit of the federal government. It. Simply. Doesn't. Say. The issuance of fiat money is entirely within even the most restrictive, benighted, backwards, illegal reading of the Constitution that even you could possibly conceive. End of story.

Ryan, there really is no point in continuing this discussion any further. The US Constitution simply does not give Congress the power to operate a central bank. Coining money and regulating weights and measures is not the same thing as issuing money, nor is it the same thing as giving monopoly privileges to a non-government, private central bank.

Apparently my "strict-constitutionist" views rub you the wrong way, and I'm not sure why. I believe that the constitution says what it says. I don't believe that the constitution says what a judge wants it to say. And I certainly do not think that it says what it clearly does not say. If Congress were to pass a law allowing it to establish a state church, that doesn't mean that the constitution permits the state establishment of a church. It merely means that Congress passed a law that does not adhere to the constitution. Judge Andrew P. Napolitano, hardly a lightweight, has written extensively about these sorts of issues.

As Kevin Gutzman pointed out (http://www.lewrockwell.com/woods/woods70.html):

"Legal education today is much different from what it was in John Marshall’s day, or even early in the twentieth century. When Thomas Jefferson and Edmund Randolph, John Marshall and Patrick Henry studied law, they did so by reading treatises in what was called the science of law. Common-law study was in its nature historical and theoretical, and familiarity with the history of England was essential to it.

"Now, however, American law students are almost universally subjected to the case method. Their texts are collections of judicial opinions, or in a few cases of statutes, with absolutely no historical context...In short, if the judges make a particular false assertion about the Constitution in numerous cases, students reading those opinions have no way of recognizing that assertion’s falsity. They are provided no tools for analyzing judges' claims – only with scads of the opinions incorporating those claims."

The last thing I'll say is that throughout history, in a fallen world, government leaders have always sought to control and then debase their monetary systems for their own sinful benefit. You already touched on this fact by explaining how ancient governments used to debase their coins. My problem with the federal reserve is that, while technically a private institution, it is government controlled. A gold standard controlled by a government would not work a whole lot better. While no perfect solution exists, any system that prevents the government from controlling the money supply is likely to be better than a government controlled money supply. Given the fact that all of our politicians, government bureaucrats, and judges are faced with incentives to act in their own best interests, and not in the best interests of the people (I really don't think I need to get into public choice theory here), then I don't understand why it is so hard for you to admit that a government that controls the money supply is going to tend to abuse that power, and that it is going to tend to use it for its own benefit and to the detriment of its citizens. No, there is no perfect solution, but at least the free market provides competition to minimize the impact of a single central planner destroying an industry.

Actually, I lied. I'll leave you with this article by Dr. Herbener, professor of economics at Grove City College. He answers most of the claims you've already made against a free-market monetary system.

http://www.mises.org/freemarket_detail.asp?control=149&sortorder=authorlast

Ben: You don't get to criticize American legal education because you don't have an American legal education. As is abundantly clear from your legal arguments thus far to anyone who does possess even a partial legal education, you don't know shit about law. You're wrong about stuff we learn in the first day of classes. The reason we read cases in law school is because cases. are. law. Judges make law. They do not legislate, but they do make law. This is what it means to be part of a common law system. Arguing that current legal education reaches different conclusions than you would like does not help your case, it only establishes what I've been saying all along: you're a fruit.

All you're doing is spouting back dogma you've gotten from someone else. I'll grant that you've read the Constitution, but I won't grant that you understand it, because your conclusions demonstrate that you do not. I can't believe that you've read Marbury or M'Culloch, and until you have, you don't really get to say what the Constitution means, because those two cases are the foundation of American constitutional jurisprudence. You are speaking from ignorance, and it shows. I get to say this because I have read those cases, and I know what they say, and they do allow the federal government to create a central bank.

And as far as legal education being different now than it was 300 years ago, you're largely wrong there too: legal treatises were kind of a new idea in the 18th century, as the first truly modern legal treatise was written by Melancthon, one of Luther's disciples, in the mid-16th century. But lawyers had been reading cases to learn law dating back to Magna Carta and before. Why? Because it has always been from cases that one learns law in a common law system such as ours. Barristers needed to know the kinds of arguments that judges would allow, and they did this by reading case reporters. We're talking 800 years of legal education in this way. The reason the American founders read more treatises than they might otherwise have done is because they were trying to make up a judicial system from scratch (as were the Protestant law professors who wrote the first treatises), and cases aren't nearly as helpful for those purposes than for learning the law of a pre-existing legal system.

A monetary system isn't the kind of thing that can be "debased" to begin with unless you're positing some kind of divinely infused value to stuff which it is sinful to mess with. Which is downright bizarre. Where you get that is completely beyond me, but it's abundantly clear that without something very much like that your system is not only completely non-viable, but completely unnecessary. Money bears Caesar's likeness and inscription: he can do whatever the hell he wants with it. Sovereigns rule by fiat else their sovereignty is meaningless. Representative forms of government don't change this, they just reallocate sovereignty.

You're drinking some fucked-up Kool-Aid, man. If you showed up at any reputable law school and made these kind of arguments the entire class would die laughing. Even the people with the narrowest reading of the Constitution as is possible universally accept early 19th-century case law as good law, because it was made by the Founders.

Face it: your views are entirely outside the realm of legal, historical, and academic respectability. Even your precious Mises would find your position untenable.

Ryan, saying that someone cannot criticize something because he is not a part of it is obviously a logical fallacy. You are not a Muslim, and you have never received Islamic clerical training. Therefore, you are not qualified to criticize Islam. You're also not Austrian; therefore, you are not qualified to criticize the gold standard, at least according to your logic.

If you had any understanding of historical context, then you'd understand that the Constitution does not permit Congress to charter a central bank. Alexander Hamilton wanted one, but he was out-voted. The signers specifically decided NOT to put a clause in the constitution permitting Congress to do that. That's why Congress did not do so for almost 150 years.

If you actually bothered to read any of those links, then you could see the full arguments rather than dismissing it out of hand. If you actually cared about obtaining a true understanding of an alternate view, then I'd suggest that you read this (http://www.mises.org/freemarket_detail.asp?control=248&sortorder=authorlast) and see why people actually say that the Fed is the root of economic evil. But you've clearly shown that you have no interest in examining the history, and that your only real interest is in parroting mindless, mainstream propaganda without actually looking at any alternative thoughts or ideas. I know what the mainstream position is. I've read the mainstream textbooks. I've read the mainstream journals. You, apparently, have never bothered to actually read an Austrian defense of the gold standard and sound money. You're just parroting the nonsensical claims that non-Austrians make. You don't even realize how nonsensical they are, because you don't seem to have ever actually tried to approach the issue from any other perspective.

Your entire response reeks of the arrogance and ad hominem attacks that have become part and parcel of what it means to be a lawyer in an America. What's more, it's patently unchristian. I don't agree with you, but I have refrained from resorting to childish name-calling. I hope you become a successful lawyer. I really do. I don't have any personal problems with you, but for some reason, you have chosen to make this issue personal, and that's why I don't have any more interest in continuing the conversation.

Incidentally, the M'Culloch case you cite (assuming you're referring to McCulloch vs. Maryland) does not authorize Congress to charter a central bank. It is the case in which Judge Marshall makes the ludicrous decision that the Constitution contains "implied powers." He made this decision because the Constitution does not give Congress the actual power to charter a central bank.

If you looked at the actual historical context, then you'd understand that Judge Marshall was a federalist, much like Alexander Hamilton, both of whom desired to have a strong, national government with a central bank. The only reason that Marshall was even appointed as a judge was because John Adams, another federalist friend of Hamilton, appointed him in 1801, the day before he left office. Marshall was one of the dozens of the infamous "midnight federal judges" appointed by Adams, whose primary purpose was to make disingenuous, constitutionally-questionable decisions. Marshall's entire career was one in which he repeatedly ruled that federal power is unlimited.

The historical context would also reveal, if one chose to look at it, that the federalists did not at all like Jefferson and the anti-federalists. Judge Marshall, Hamilton, and the rest did not even accept Jefferson as president. The federalist judges then proceeded, in Marbury v. Madison, that the SCOTUS has the power of judicial review, which they literally used to confer upon themselves the clearly unconstitutional ability to overturn federal laws. None of the constitution's framers ever foresaw such a power.

The point is that the constitution clearly does not give Congress the actual power to charter a central bank. If it was constitutional, the federalists could have simply pointed to the constitution and chartered a central bank. Instead, they had to engage in all sorts of backhanded, unconstitutional dealings to create such a power that clearly does not exist in the original document.

Ludicrous, eh? Here's a little test for you. I'll grant you the fact that the words "central bank" don't appear in the Constitution (it's always capitalized when referring to the document, by the way). Fair enough. It doesn't need to. The Constitution also doesn't authorize Congress to raise and maintain an Air Force or Marine Corps and does not provide that the President shall be the Commander-in-Chief of either. Yet Congress has, and the President is, and no one has any problem with that. Why? Because the Constitution clearly allows it even though the words "Air Force" and "Marine Corps" don't appear there. They are understood to include the armed forces in general, though a strict reading of the text does not allow such a reading.

The words "central bank" don't appear in the Constitution either. What does appear there is a power to regulate interstate commerce and the power to pass those laws necessary and proper to achieving that end. QED.

Two notes here: first, there are very few things which the Constitution clearly does not give Congress the power to do. One is to originate spending bills in the Senate. Another is to remove the President or any executive officer by grounds other than the impeachment process. Another is to amend the Constitution unilaterally. Second, legislative history is not law. The Constitution is law. The US Code is law. Cases are law. The Federalist Papers are not. Talking about "what the Constitution's framers foresaw" doesn't actually matter. The context of cases is sometimes useful for understanding what ambiguous passages in cases means, but is not actually relevant to the law set down by the holding. I don't care whether Marshall was a Federalist or a Democrat, because it doesn't matter. He was the Chief Justice of the Supreme Court of the United States, which issued an opinion. Context and "authorial intent" is not law. Law, i.e. the documents themselves, are the law. If the power to charter a central bank were forbidden to Congress the Constitution would say so. Just because the anti-Federalists were unsuccessful in inserting clauses which forbid practices they didn't like and preventing the Constitution from being read in ways that support Federalist ends is no reason to insert clauses into the Constitution by reading from legislative history. That's just as "backhanded" as anything you've accused me or other parties of doing. It's also the only possible way of arguing that the Constitution forbids Congress from chartering a central bank. It just doesn't.

My point about legal education is not as fallacious as you make it out to be, though on a second reading I see your point. I was not attempting to argue that the fact that you haven't a legal education means you are not allowed to comment on it at all. The point I was attempting to make is that your criticisms of legal education merely confirms your lack of knowledge, to the point that you can't even tell that you're wrong. Suggesting that current legal education is inferior because it reads more cases than treatises is simply uninformed.

I read the Mises.org article you cited. I actually had beforehand. I didn't bother responding to it because it's breathless, paranoid rambling. Lots of claims. No actual data. Not a shred. Some good material for the next Dan Brown novel, but little else. Thus not really worth answering. You're also wrong in suggesting that I haven't read any Austrian stuff. I in fact have. I just think that there are non-conspiratorial reasons that it's on the fringes of economics, and if articles like the Mises.org article you cited are characteristic, they deserve to be on the fringes of history too.

See, look. Arguing that actions of the Supreme Court are unconstitutional is decent rhetoric, but effectively means that you're outside the legal conversation. You can disagree with the outcome and think the decisions are wrongheaded, but the decisions of the Supreme Court are by definition legal. Yeah, that's a lot of power in one body. Deal with it. Saying that the government is acting unconstitutionally when the Supreme Court disagrees denies the premises that make meaningful conversations possible by emptying the word "constitutional" of any falsifiable meaning. The Constitution means what the Supreme Court says it means, no more, no less. Whether or not you think it should work that way is irrelevant: it does work that way. Going all Platonic sounds nice but is of no legal force.

As a final word, I'm not the only one who's gotten personal here, nor was I first. You've slighted my chosen profession on several occasions, so don't feign innocence. Still, I apologize if I overreacted.

Here's your chance to do some research, guys.