At Law and Liberty, Is the Federal Reserve Constitutional? by Peter Conti-Brown:
The claim that the “Federal Reserve” is “unconstitutional” actually entails a broad family of
arguments. I can imagine four mostly distinct, sometimes overlapping lines of argument, although there may of course be others. First, the Fed is unconstitutional because it pursues bad policy. That is, “unconstitutional” and “pursues bad policy” are treated as synonyms: when the Fed pursues good policy, it is constitutional; when it pursues bad policy, it is unconstitutional. Second, the Fed is unconstitutional because our federal government is one of enumerated powers, and nowhere does the Constitution permit the modern practice of monetary policy. This is an existential challenge: accepting this argument necessarily means the abolition of the Federal Reserve. Third, the government may be able to pursue monetary policy, but must do so squarely within the Madisonian tripartite framework of the legislative, executive, and judicial branches. This is not an existential challenge per se, but would require the Federal Reserve to lose its vaunted “independence”—as that term is conventionally used—and be subject to the direct control of the executive branch, subject to legislative design. And fourth, central banking fits within the constitutional framework, and an independent Fed does too, but specific features of the Federal Reserve violate specific constitutional principles or provisions as the Supreme Court has construed them. In that sense, the Fed itself is not unconstitutional so much as, for example, the participation of private citizens on the Federal Open Market Committee is constitutionally impermissible.
With responses from Gerard Magliocca and Richard Timberlake.
Posted at 6:03 AM