your point that some people disapprove of the Fed says nothing as to whether it is constitutional, which is the point I was raising. Ron Paul believes it is unconstitutional–he is wrong.

It doesn’t matter if the Founding Fathers would have supported the Fed–I can imagine we have many current laws they would not support. The point is that the Fed was created by Congress in a constitutionally prescribed manner: Congress passed the Federal Reserve Act in 1913 and President Woodrow Wilson signed it into law.

Incidentally, Andrew Jackson (a favorite of yours) vetoed the first central banking system out of existence in 1832. If Ron Paul becomes president that is pretty much his only option.

My point, is that there are many, many respected economists, including Nobel prize winning giants such as Milton Friedman who have blamed the Federal Reserve for the Great Depression, and support abolishing it. Another important point, which Friedman himself pointed out, is that a large fraction of all of the economists who work full time on monetary research are employed by the Federal Reserve.

I also sincerely doubt the framers of the constitution supported anything remotely like the Federal Reserve. I’m interested in getting my hands on as much reading material about the topic as I can, though.

In other words, Congress has duly delegated to the Federal Reserve System the authority to regulate the value of money as stipulated in Article One, Section 8, and the Congress retains authority over the Federal Reserve System.

The Federal Reserve Banks are owned by private member banks (see below). Each member bank owns nonnegotiable shares of stock in its regional Federal Reserve Bank; see below). In Lewis v. United States,[18] the United States Court of Appeals for the Ninth Circuit stated that “the Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations.” The opinion also stated that “the Reserve Banks have properly been held to be federal instrumentalities for some purposes.”[19] Another decision is Scott v. Federal Reserve Bank of Kansas City[20] in which the distinction between the Federal Reserve Banks and the Board of Governors is made.

The member banks are privately owned corporations. The stocks of many of the member banks are publicly traded.

The goal of any company corporation is to maximize profits. To assume that their goals align with the greater good of the people is a bit unrealistic. To assume they set aside their own goals for the good of the people is naive. In most markets, this isn’t a large problem, since there is competition. Putting our monetary policy under the control of a few privileged private entities, on the other hand, is disturbing, as is the fed’s opacity.

Yes, Congress could force the information out of them or eliminate them, if push came to shove, but that would take a pretty big shove. Thus far, they haven’t even been capable of getting information out of a hugely unpopular vice president, or stopping the war they were voted in to end. Taken to its logical conclusion, Congress could legislate away pretty anything they wanted to. I don’t see it happening anytime soon, but we can hope.

if push came to shove, the Fed wold have to bow before Congress, it’s that simple. Like I wrote before, one can argue that Congress doesn’t oversee the Fed closely enough, but that is a far cry from saying the Fed is unconstitutional.

Ron Paul shows a lack of understanding if he describes the Fed as a ‘fiat’ privatized monetary system. As Trevelyan has pointed out, it is a creature of Congress and exists solely at the pleasure of Congress. It is constitutional, full stop. Jefferson and Madison were arguing about something different entirely.

Paul’s argument is as nutty as those who say the income tax is unconstitutional.

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm

You’re joking about the lack of transparency? The exact timing of interest rate changes is determined by the board, but everyone knows which way the wind is blowing. The institution is about as transparent as they come.