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The president as chief economist
The economy is a term that means the business and employment activity in a nation. When business activity is strong and employment rates are high, meaning most working people have a job, the economy is in an inflationary state. When business activity sags and unemployment rates rise, the economy is in a recession.
The Constitution does not mention the national economy. Congress, however, has the power to regulate things that affect the economy, such as taxes, commerce, and money. When the Constitution was written in 1787, people generally did not think the government was responsible for the health of the economy.
That thinking changed with the presidency of Franklin Roosevelt. Roosevelt became president in 1933 when the American economy was in the middle of the Great Depression (1929–41). At the worst point of the Depression, one out of every three to four working Americans did not have a job. In those desperate times, people began to look more to the federal government for help with the economy. Roosevelt responded with his famous New Deal, a set of government programs designed to pump federal money into the economy to spur job growth.
As of 2005, the president is often considered the chief economist for the nation. Presidential candidates often include their own economic plans. When the economy is doing well, people generally credit the president, and when the economy is doing poorly, people generally blame the president.
The expectation that presidents can control the economy is unrealistic. Presidents have the power to affect the economy to some extent through the policy decisions they and their advisors make. The overall health of the economy, however, is determined by many complicated factors, all of which are beyond the power of the government to control completely. Even professional economists cannot always predict what will happen to the economy from one year to the next. Still, Americans have come to expect presidents to have a plan for improving a bad economy or making a good one even better.
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;
To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
To provide for the punishment of counterfeiting the securities and current coin of the United States;
To establish post offices and post roads;
To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.
The Case for Independence
The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart an inflationary bias to monetary policy. In the view of many observers, politicians in a democratic society are shortsighted because they are driven by the need to win their next election. With this as the primary goal, they are unlikely to focus on long-run objectives, such as promoting a stable price level. Instead, they will seek short-run solutions to problems, such as high unemployment and high interest rates, even if the short-run solutions have undesirable long-run consequences. For example, we saw in Chapter 5 that high money growth might lead initially to a drop in interest rates but might cause an increase later as inflation heats up. Would a Federal Reserve under the control of Congress or the president be more likely to pursue a policy of excessive money growth when interest rates are high, even though it would eventually lead to inflation and even higher interest rates in the future? The advocates of an independent Federal Reserve say yes. They believe a politically insulated Fed is more likely to be concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level.
A variation on the preceding argument is that the political process in America leads to the political business cycle, in which just before an election, expansionary policies are pursued to lower unemployment and interest rates. After the election, the effects of these policies - high inflation and high interest rates - come home to roost, requiring contractionary policies that politicians hope the public will forget before the next election. There is some evidence that such a political business cycle exists in the United States, and a Federal Reserve under the control of Congress or the president might make the cycle even more pronounced.
Putting the Fed under the control of the president (making it more subject to influence by the Treasury) is also considered dangerous because the Fed can be used to facilitate Treasury financing of large budget deficits by its purchases of Treasury bonds. Treasury pressure on the Fed to "help out" might lead to more inflation in the economy. An independent Fed is better able to resist this pressure from the Treasury.
No tax or duty shall be laid on articles exported from any state.
No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another.
No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.
The President shall be commander in chief of the Army and Navy of the United States, and of the militia of the several states, when called into the actual service of the United States; he may require the opinion, in writing, of the principal officer in each of the executive departments, upon any subject relating to the duties of their respective offices, and he shall have power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment.
He shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the advice and consent of the Senate, shall appoint ambassadors, other public ministers and consuls, judges of the Supreme Court, and all other officers of the United States, whose appointments are not herein otherwise provided for, and which shall be established by law: but the Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments.
The President shall have power to fill up all vacancies that may happen during the recess of the Senate, by granting commissions which shall expire at the end of their next session.
Originally posted by endisnighe
The congress was to MINT coin, not create fiat currency. Please show me the Amendment to the Constitution that allowed the government to create a fractional reserve banking system that uses fiat currency.
Also, regulate commerce DOES NOT mean regulate in the sense of control. That is the modern day usage of the terminology. That is a LIE.
Regulate meant to make regular. And that was only between nations and intrastate, not interstate.
Our government has thrown out the Constitution and has been robbing the American citizen for over a decade now!
Labor was NEVER meant to be taxed. The right to PROPERTY and the seizure of property by taxation was PROHIBITED by the Constitution!
Please no revisionist history or interpretation here.
The government has become the tyrants the founders had warned you about.
Originally posted by endisnighe
reply to post by Frankidealist35
I was not talking to you, I was pretty much reiterating your points. Just in my own big mouth way. Sorry if you thought it was that way. That is why I did not put a reply to.
As for your question. Which economists were you referring to? The idiots that said nothing to see here, no problems on the horizon, everything is peachy?
Or the ones warning that the collapse was inevitable, or purposeful?
I am thinking Max had it right. There ought to be a lot of bankers and congressman in prison right now, if not swinging for treason.
As for the politicians, if this Cap and Tax thing goes through, I expect my 50 Republics to round everyone up in Washington and have a rope tightening party.