Former Secretary of Labor Robert Reich (hat tip: Economist’s View) offered some thoughts Friday about democracy and the Federal Reserve. Both his insights and his errors are instructive.
You probably learned in school the United States government has three branches. Actually there’s a fourth, in some ways more powerful than the other three. It’s called the Fed, and it pretty much runs the American economy.
I agree with Reich that the Fed is important, but to say it “pretty much runs the American economy” is I hope intentional hyperbole. The Fed does not produce a drop of gasoline nor an ounce of wheat. Its core responsibility is to decide how much money to allow in circulation. The notion that in doing so it somehow runs the economy, or could be tapped to eliminate the business cycle, seems to have become one of the urban myths of our time.
Furthermore, the power to create money is precisely the kind of power we never want to have in the hands of Congress or the President. If the politicians had the ability to pay for their programs simply by printing money, there is no question that the outcome would be ferocious inflation. One of the clearest lessons of history is that a central bank that lacks strong independence from the fiscal authorities is a recipe for disaster.
The ability to create money to pay for whatever you might deem worthwhile is one that few human beings are capable of exercising responsibly. For this reason, the key institutional premise on which an independent central bank is founded is that it in fact does not have the power to create wealth or direct its allocation at all. Instead, the Fed is supposed to increase the money supply by purchasing a previously issued Treasury security on the open market, buying from whoever is willing to sell at the best price. The seller of the security is no richer or poorer than before, having acquired cash but surrendered a bond of equivalent value. But the seller’s bank ends up with the reserves (electronic credits for cash, if desired) that the Fed has just created, while the Fed now owns the Treasury securities. The seller’s bank could lend those reserves to any other bank on the federal funds market. Through this arms-length process, the reserves would end up in the hands of whoever wanted them most and interest rates could adjust, without anyone in the Federal Reserve ever making a decision to favor one group over another.
Since August, however, the Fed has been pursuing a different vision of its mandate. Francisco Torralba covers some of the background on exactly what the Fed has been up to. To take one example, in a standard repurchase agreement, the Fed makes a loan to a counterparty in the private sector, crediting the counterparty’s bank with newly created reserves. The Fed recently has been substantially increasing the volume of its repo operations, and simultaneously selling Treasury securities from its existing holdings in order to drain the newly created reserves back out of the system. Thus unlike traditional repurchase agreements, the operations do not affect the supply of reserves at all, but have the net effect of swapping out the Fed’s Treasury holdings for the collateral offered against the loans, which might be mortgage-backed securities issued by Fannie or Freddie. Although repos have always been a tool that the Fed could use to alter the composition of its asset holdings in this way, to my knowledge the Fed had not made much use of such simultaneous dual operations prior to last fall, and the magnitude of its current holdings of repo assets (up to $100 billion last week) is enormous by historical standards. We now have a whole lexicon of new Fed acronyms for different measures that all have the same bottom line, of swapping out Fed Treasury holdings for riskier loans to private borrowers, including the TAF (Term Auction Facility), PDCF (Primary Dealer Credit Facility), and
TSLF (Term Securities Lending Facility). The combined increase since August 1 in the assets held by the Federal Reserve under this new alphabet soup is $302 billion, which represents 38% of the Fed’s holdings of Treasury securities on August 1.
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And this is where I feel that Robert Reich raises an excellent point:
the Fed can expose taxpayers to hundreds of billions of dollars of potential losses without a single appropriation hearing, as it did recently when it allowed Wall Street’s major investment banks to exchange tainted mortgage-backed securities for nice clean loans from the Treasury. And the Fed can do amazing things– like decide one big bank, JP Morgan, is going to take over another, Bear Stearns, backed by $29 billion of taxpayer money.
Reich is exactly correct– the Fed’s recent behavior does expose U.S. taxpayers to a risk of default on these assets. While some may argue that the Treasury is exposed to risks in the current situation no matter what the Fed does, it seems to me that this decision is ultimately a matter for fiscal policy. And just as I don’t want Congress deciding how much money to print, I don’t want the Fed deciding how much taxpayer money is appropriate to pledge for purposes of promoting financial stability.
Whether or not it is wise for the Fed to be making decisions of a fundamentally fiscal nature, former Federal Reserve Chair Paul Volcker (hat tip: Calculated Risk) questions the legal authority and historical precedent for measures such as the Fed adopted in the case of Bear Stearns:
The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded central banking principles and practices.
Although I shudder at Reich’s suggestion that we need to get Congress involved in the Fed’s decision of what interest rate to set, I agree very much that Congress has a quite proper role in determining the magnitude of the fiscal risk that the Fed opts to assume. Congress’s statutory limit on the quantity of debt that the Treasury can issue is something I have previously derided as political circus. But a statutory limit on the non-Treasury assets that the Fed is allowed to hold might make sense. Perhaps the outcome of a public debate on this issue would be a decision that the Fed needs the power to lend to private borrowers even more than the $800 billion or so limit that it would run into from completely swapping out its entire portfolio. Indeed, Greg Ip speculates on the possibility that the Fed could “ask Treasury to issue more debt than it needs to fund government operations.” Surely that would be something that should require congressional approval. Or perhaps after deliberations, Congress would decide that the business of swapping Treasury debt for private sector loans is one that is better run by the Treasury rather than the Federal Reserve.
In any case, I agree with both Reich and Volcker on this much– these are not decisions that the Federal Reserve should be making on its own, nor on the basis of behind-the-scene consultations with the President or congressional leaders. Bernanke needs to ask for explicit statutory authorization for his plans.
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Before we give the Fed more power to lend to private borrowers, we need to give the Fed more power regulate private borrowers, including capital reserves, leverage and risk, just like federally insured banks. Only then can we can begin to discuss how much exposure we will allow the Fed to place on the Treasury.
“But a statutory limit on the non-Treasury assets that the Fed is allowed to hold might make sense.”
Gold?
The Fed is authorized to lend money to member banks. Should that be subject to this limit?
In 98, 99 I started to wonder what would happen if the US govt. depleted the supply of treasury bonds to the point that there was not enough to cover reserve bank credit. What assets would the Fed be able to monetize then?
James, I am with you 100%.
But let’s add that the Fed has already been politicized. As you yourself posted, Arthur Burns urged printing money to get Richard Nixon re-elected. Alan Greenspan was an ideologue who did not serve the nation well. And even if the Fed Chairman is an angel, the banking industry holds the balance of power at the Fed and can misuse it. Nowhere are the interests of the nation at large represented.
The Fed should certainly be enjoined from engaging in fiscal policy. But there is more wrong with the system than that.
This central bank is actually writing its own mandate(s) in real time as it moves along.
This is a strange sort of coup,
but a coup it exactly what it is.
Two thoughts that might be worthwhile in considering whether or not the FED should be independent: (1) Is it possible that Greenspan purposely allowed the stock market bubble and then the housing bubble to develope to demonstrate the fallacy of central banking? According to this line of thought Greenspan would go down in history as one of the greatest and certainly the most autonomuous secret agents of all time. (2) Somewhat more likely is that Greenspan allowed the bubbles out of vanity. To consider that this whole mess was the consequence of the vanity of one man is sobering.
JDH,
The Fed does not decide “how much money” but rather the cost of that money (interest rate). The Fed sets the rate and supplies or drains the required reserves. You might say the Fed influences the money supply, but it is the desire of the public to borrow and the willingness of banks to lend that ultimately determines the money supply.
I would also say since we left the gold standard the distinction between the Fed and the Treasury has blurred somewhat, but that is a subject for another day.
Markg, it’s a matter of how you parameterize the system. Choosing one of the variables (the interest rate, as you express it) determines the other (the quantity of reserves). The Fed gets to choose only one thing, but you can summarize that one choice in different ways.
You’re right that both current Fed practice and most recent academic papers frame the situation as you have– the Fed chooses an interest rate, and the money supply is then impied by that decision. But it’s really just a single decision. And one drawback of the popular framing is that it obscures a bit the distinction between nominal and real interest rates. As a result, it can tempt us to think that monetary policy is capable of accomplishing more than it really is. I chose instead to express the issue in the older, but equivalent, terms of controlling the money supply as a quick way to remind people of the fundamental limit on what you should expect to be able to accomplish with this tool.
Excellent post. I agree also. Incurring risk to the taxpayer is a line that should require democratic input through congress.
It also appears to be the right thing to do at the time but, I wouldn’t expect congress to deal with this issue any better then they do others. It would simply be a battle of framing, perceptions, and political grandstanding to see who can get the most tv time.
If the financial intermediaries left with the hot potato of sub prime mortgage packages they are unable to sell due to the current uncertainty, then the Fed taking temorary control until the housing market stabilizes would make good sense. If the underlying mortgages default rates do not climb too high, those assets would eventually regain their value and be transferred back into the financial system. The key is, what is the default risk? What will they wind up being worth? That is the question that prevents the continued functioning of the market as it had been.
Heck, if congress decides to bail out the holders and/or borrowers then the question becomes moot and the cost will probably be higher to you and me.
Look, we, the taxpayers are going to pay for every Fed failure. So, therefor we have the responsibility. The authority and responsibility to create currency and and manage credits are given to the Congress by the Constitution. Granted there is a political risk, but I think recent events have created seriuos questions about the theory of “Fed independence” being a good thing. I am propsing to TakeBackTheFed.com. Ie., let’s fully renationalize the Fed, and unwind all the derivatives bet that are currently clogging up the credit system and leading to a financial collapse.
Well, I am thankful that a bunch of honest American heroes disagree with you completely.
Franklin, Jefferson, Madison, Lincoln and a cadre of patriotic leaders have all decried that we won the Revolution, but lost what the war was all about – the money-creation powers of the Colonies.
Taxation without representation was a function of monetary policy.
It appears to me that what Reich said was exactly correct.
And your statement that there is a NECESSITY that the money-creation powers of the government – you know, like it says in the U.S. Constitution – must result in glamorous and uncontrollable inflation flies in the face of what I would see as reality.
No people would accept of their government the undercutting of the national economy due to greed and power (please see current events) without the necessary reforms to that power.
I challenge the readers to see:
http://www.neweconomics.org/gen/uploads/CreatingNewMoney.pdf
and to explain why the system so described, you know, the same one called for in the U.S. Constitution, would not be superior to that of the FED or the Bank of England.
A small revolution.
joebhed – To what do you attribute the hyper-inflation of Zimbabwe today, Weimar Germany, and any number of other instances? Surely you’ll admit that these governments were printing money to pay for spending.
JDH,
The idea that “the interest rate” and the (base) money supply are two sides of the same coin is simplistic. Firstly, there is a variety of interest rates depending on the term and type of debt concerned, and some central banks, including the Fed, tend not to deal in the debt of which they are trying to control the interest rate. For example, the Fed mostly buys (and sells) treasuries in its monetary policy operations which are aimed at controlling an overnight unsecured interbank interest rate. It seems likely that the Fed would have more control of the Fed funds rate for a given change in base money stock if they dealt in unsecured overnight debt. Secondly, as I have noted on this forum previously, it is questionable whether the central bank balance sheet is sufficiently large to control any of these interest rates (see Ben Friedman’s NBER WP 7420).
Hopefully, one consequence of the present money market turmoil is that it will encourage academic economists to pay more attention to the arcane details of monetary policy operations.
RebelEconomist, by “the” interest rate I refer specifically to the nominal overnight fed funds rate. This the Fed unambiguously does control, at least within a certain range– do you not hear them announce each time they choose to change it? And the Fed unambiguously does this through the time path for the reserves it chooses to create.
You can’t set one target for the fed funds rate and a different one for the quantity of reserves. There’s only one instrument here. That is not “simplistic”, it’s a fact of life and a feature of any coherent model you care to write down.
Let’s see. Mugabe and Weimar Germany?
In both cases, uncontrolled and uncontrollable regimes, hell-bent on their own survival.
I’m glad you didn’t mention the U.S. Continental or the Confederacy’s hyper-inflation, both caused by the more traditional counterfeitting method.
“Money does not manage itself”.
The size of the nation’s money supply and its growth patterns must meet the real economic needs of the country, and not any politician in power.
Adam Smith aside.
If you read the NEF’s Creating New Money treatise, you can criticize its reasoning.
As for Weimar, history is history.
This is fundamental.
What is a nation?
Did the Revolutionaries fight against Britain’s refusal to allow them to circulate their own currency?
Making the tea-tax payable in gold coin of it’s liking?
Does the Constitution give the power to the Congress to create money?
Do we elect our Congress?
I say that the case for a publicly-controlled money system is stronger right now than it ever has been.
Lincoln created US dollars to fight the civil war.
Sayeth he at the time:
“I have two great enemies; the southern army in front of me, and the financial instiutions in the rear. Of the two, the one to my rear is the greatest foe. The government should create , issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of the consumer. Money will cease to be the master, and become the servant of humanity. Demoocracy will rise superior to money power.”
And, here we are.
Stay on the job of applying sunlight to this, Professor!
Having just finished Rothbard’s Great Depression this weekend, it is amazing how many of the tricks being tried today were tried over ’29-’33 (including getting liquidity to brokerages), to no avail.
‘Prices’ are too complex — covering both consumption goods and capital goods — to attempt to control with a central body, given that they move in different directions at different parts of the business cycle (capital goods prices falling today, consumer prices rising; five years ago, the directions were reversed).
I think that we have Armageddon coming, and that we will be returning to distributed money creation, as we lived with for the first 150 years of The Republic.
Please, all, read, print out, support, circulate, link, etc. the proclamation at
http://www.TakeBackTheFed.com
The time as come for the citizen to retake its government.
I have sent to my congressman, and he has replied (did not say much, but I wrote back). I have also sent it to both the senators for California, as well as Ron Paul and another Senator.
The proclamation is perfect for City Councils to pass non-binding resolutions on, too! (less helpful, but any debate on this issue is good).
Mark
http://www.siv0.com
JDH,
My first point is that the base money supply is not “implied” by the Fed funds rate, because that relationship depends on how monetary policy is implemented. So, to some degree, the Fed funds rate and the base money supply are independent policy settings (I think that it is a similar question to whether sterilisation allows monetary and exchange rate policy to be pursued independently).
My position on the second point is not that I know the answer, but that it is a puzzle to me (and apparently to Friedman and Woodford too if I do not misrepresent them) how the Fed do manage to control market interest rates. One possibility is that they do not have much control, but they “set” an interest rate that is close to the level that would clear the market anyway. Another possibility is that the interest rate (that the central bank is trying to control) could take any value in a range, and the market accepts the lead signalled by the central bank.
http://bigpicture.typepad.com/comments/2008/04/how-greenspan-i.html#more
The more I come to understand the operation of the Bernanke mind the closer I come to the belief that he is quite possibly the most dangerous person living today,
exceeding even the danger presented to the world by Richard Bruce Cheney.
(I choose not to take note of George Walker Bush, since a sock puppet is harmless in the absence of a hand.)
One recent article on the net pointed out that liberals (called “progressives” at the time) created the Fed to manage the money so as to take such control out of the hands of private bankers (specifically J. P. Morgan in 1907.)
Now they complain when their creation does just what they created it for.
As I pointed out on an earlier thread, the Fed will soon come to own a significant chunk of America’s homes, albeit through intermediaries, as the securitized mortgages go into default. That will make our money supply rest, in part, on empty, abandoned houses. Of course, those would otherwise be writeoffs for the mortgage holders and a contraction of the money supply.
A technical point – isn’t one way the Fed creates money is by its requirements on reserve requirements for banks? If they lowered the requirement, banks could issue more loans for a given asset base, hence creating more money. Tightening the rule would contract the money supply.
On your technical question, Joseph, my answer is no. Reserve requirements are actually quite small already. By far the biggest part of reserves created ultimately ends up as cash held by the public, which the public holds not because it’s required to but because it wants to.
Charles wrote:
Charles,
Excellent post, only it contradicts your first sentence. The reason your post is excellent is that it points our areas where JH is slipping. You would be better to say you are with him 90%. That is about where I am.
JDH, you are correct that the FED can only choose one option but that option does not necessarily do what the FED wants it to do. Because the FED uses an interest rate methodology it must supply what ever level of money is dictated by their defense of their interest rate. This in essence makes their actions totally ineffective. But where they can have an enormous effect is when they manipulate interest rates creating booms like the housing boom and then reversing themselves and creating a credit crisis, bankrupting many as they change the rules of the game.
In this last sense Reich is correct that the FED runs the economy, not in the sense of making it more productive, but in the sense of introducing wedges into production and reducing prosperity.
jg,
Don’t take Rothbard at face value. His economics has a lot of error in it for example to prove his theory about the 1920’s creating the Great Depression he expands the definition of the money supply even beyond Friedman and Schwartz to take in credit which will alway expand when business is growing.
But that said his America’s Great Depression does offer details and facts that most economists today choose to ignore concerning the problems of government intervention.
I recommend Lionel Robbins Great Depression next. The book is not as massive as Rothbard but much more founded in reasonable economic thought. It is really too bad that Robbins went over to the dark side.
Wow, that’s interesting.
It is posited from a web article that it was the Progressives who created the FED to manage the nations money for the purpose of taking control from the private bankers.
I have a bridge to sell that gentleman.
Dear Sir:
In fact, it was the private bankers who created the FED in a surreptitious power grab on Christmas Eve in 1913. It was done for the purpose of taking control from both progressives and conservatives, who wanted to initiate a publicly-controlled, non-debt based money system.
After Wilson signed the bill, he later lamented his error.
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world – no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
Please see current events.
JDH:
“In any case, I agree with both Reich and Volcker on this much– these are not decisions that the Federal Reserve should be making on its own, nor on the basis of behind-the-scene consultations with the President or congressional leaders. Bernanke needs to ask for explicit statutory authorization for his plans.”
In the meantime, are you suggesting that it would be better risking a liquidity trap (on 3/19/08 the 30 and 90 day tbill rates were, respectively, .26 and .61 percent)? What would be the cost to tax payers if monetary policy becomes inoperable? –SMG
April 14, 2008
On March 31 I indicated my approval of the idea that the Fed should have discretion over the conduct of monetary policy; in Econbrowser, Prof. James Hamilton has pointed out that discretion should have boundaries:
And this is where I feel that Robert …
JDH,
You wrote “For this reason, the key institutional premise on which an independent central bank is founded is that it in fact does not have the power to create wealth or direct its allocation at all.”
However, doesn’t the U.S. central bank generally buy only Treasury securities? And doesn’t this mean that the U.S. government benefits from a flow of newly created dollars into the market for its debt?
And on the other hand, I’m a holder of part of the existing stock of dollars. If the Fed creates new dollars to buy U.S. Treasury securities, I lose because the purchasing power of my dollar holdings is diluted.
As I illustrated, the action of the central bank is not neutral with regard to the distribution of wealth. In truth, there are winners and losers. The alleged neutrality of central bank activity is a smoke screen that, for the good of our society, should be removed.
smg, I’m distinguishing between the question of what policy should be adopted from the procedural/legal question of who should be responsible for implementing it. I don’t think the Fed can assume unilateral responsibility for what is essentially a fiscal decision, even if you think it’s the right decision to make.
Dick, there is no contradiction in saying (as JDH did) that there is danger in the politicization of the body entrusted with controlling the money supply and pointing out (as I did) that that body has, historically, been politicized–producing inflation– in just that manner.
By people calling themselves “conservatives,” one might very pointedly add.
I’m confused. Is it your contention that the Fed abused its authority? In other words, in the case of Bear Stern, it took measures that it did not have the legal right to take?
Or are you arguing that even if what the Fed did was technically legal, these measures would have been better taken after some sort of Congressional direction? If this latter, what about the issue of nimbleness to move fast in a bad situation?
–SMG
Thanks, D-F-, for the recommendation on the Robbins book; I will look into it.
Nice post, JDH. Did I read a post somewhere about the Administration stacking the Fed, leading to resignation of a well-respected person of integrity?
“Did I read a post somewhere about the Administration stacking the Fed, leading to resignation of a well-respected person of integrity?”
Could be. Or it could be a Mad Lib which ends:
“the Administration stacking the _____, leading to resignation of a well-respected person of integrity?” 😛
smg
I believe he is suggesting that the Fed has abused its authority.
I don’t know if JDH thinks the current actions were correct. I do.
Nimbleness to move fast in a bad situation is exactly why placing monetary policy in the hands of congress scares the bejeesus out of me along with the incentive they would have to inflate their way out of debt at our expense. Those who advocate such a scenario do not understand the dangers imo. One only has to look for the economic interests involved. The guys running the Fed are paid a flat salary to do their job. Some might say their ideological bent will influence policy and such is life. The incentive for congress critters to retain their jobs by overpromising funds to constituents is a far far greater threat to monetary stability in my mind.
Following the doubts I expressed earlier about how far the the Fed actually can control interest rates, quite by chance I came across this St Louis Fed paper, which summarises the issue, is readily accessible and even references JDH!
http://research.stlouisfed.org/wp/more/1999-022
Please pardon a non-economist jumping in. Am I correct that a large volume of the posts here are from conspiracy theorists?
For example, regarding the comment “The Fed will soon come to own a significant chunk of America’s homes, albeit through intermediaries, as the securitized mortgages go into default. That will make our money supply rest, in part, on empty, abandoned houses.”
Why wouldn’t home prices will simply drop until demand and supply are balanced? A home has more intrinsic value to a homeowner-resident than an absentee bank.
TDS,
I certainly did not write that with a conspiracy in mind! But it sounds like that the Fed is now taking securitized mortgages as collateral in addition to Treasuries.
If foreclosures are increasing, some of those new securities will have the underlying assets as empty houses. I can certainly see banks and other financial institutions preferring to trade those risky mortgages for cash from the Fed.
Somebody tell me I’m wrong!
I agree that the proper course is to let the market sort it out but the politicians and the Fed don’t see it that way. The Fed is trying to keep too many stupid lenders from going belly up from their bad loans.
A government in direct control of the central bank will not necessarily use uncontrolled seigniorage as a revenue raising method. The Bank of England was directly run by the Treasury between nationalisation in 1945 and independence in 1997. This did not, in fact, result in British politicians exercising their power to print money at will. The fact is this is obviously inflationary so is generally avoided. Generally governments that use seigniorage as a major source of revenue are those that lack any other means of raising money, such as Zimbabwe.
you guys seem hell bent on several things which aren’t true.
a) money = currency, thus to preserve the sanctity of money, there can be only one form of currency. this is wrong. money is anything that is useful as a general medium of exchange. currency is the physical embodiment of money. there can be multiple currencies, but only one will generally be used if the rate between currencies is fixed (or if one dominantly out-competes the other in quality -> durability, confidence, portability, divisibility…). money adapts to varying currency on circumstance. for instance, jail makes paper currency fairly worthless, as the paper is generally worthless, and its legal tender specification does not hold up for criminal credit. neither do commodities like copper or gold have any valuable use, unable to be applied to their industrial or cosmetic purposes. thus, items of value in jail are used as money, such as cigarettes or drugs.
b) currency can only be created by central banks or government, or some collusion of both. wrong. currency can be created by anyone at anytime, or even by nature. however, creation must be limited or predictable and not clearly beneficial to some private group to ensure that the currency is widely accepted as money. the only reason central banks or governments are involved are because governments create monopolies on currency, by either outlawing competition directly, or by putting regulations (such as sales or capital gains taxes and the inability to pay taxes or legally pay debts) upon other currencies that make them impractical.
c) the constitution of the united states grants congress the authority to create money. read art 1 section 8 again. congress has the authority to coin money, and adjust its value. this meant that it would mint or re-mint individuals’ money in an attempt to standardize coins, in appearance and weight, for the purpose of expediting trade. this does not mean congress can create money. such a notion cannot be implied through that power, simply because it was a widely held belief when the constitution was framed and ratified that gold or silver could not be created, which were widely used as money. any kind of debt-based currency would be paper, making no sense to coin it. furthermore, art 1 section 10 denies the states the ability to declare anything but gold and silver legal tender and prohibits the issuance of bills of credit -> debt-based currency. given that art 1 section 8 does not give congress the authority to declare legal tender, it should be obvious that some weight and coin of gold or silver would be chosen by congress as how it defined the dollar. this is exactly how the system worked until lincoln came around and proposed otherwise…as he similarly did with the first ammendment and states’ rights to secession.
in short, multiple or privately-issued currencies don’t equal economic doom, so long as the government doesn’t interfere with the market’s choices in what it will use as money, which does not have to be universal. and congress does not have constitutional authority to create money, declare a legal tender, or create a central bank.