Oops

Search it thoroughly, and you’ll find nothing in the U.S. Constitution that authorizes the Federal Government to create an institution like the Federal Reserve, let alone to encourage home lending. Yet, no one seems much to care.

In fact, the question is rather an uncomfortable one. Ron Paul recently asked Ben Bernanke where he got constitutional authority to create money out of thin air, and Bernanke said that Congress had delegated to the Fed Congress’s constitutional power to coin money.


But of course, the Fed doesn’t coin money—it prints paper. And the Constitution doesn’t empower Congress to delegate its powers. (But that’s another battle that supporters of the Constitution lost long ago.)

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