The neoconservative talking heads recently took a short time out from praising, deifying, and anointing Texas Governor Rick Perry as the next president of the United States to chastise him for criticizing the Fed. In particular, he was taken to the neocon woodshed for saying that the printing of trillions of dollars of paper currency was harmful to the economy and, since we are in a depression, such an act was "almost treasonous."
Governor Perry could not have been referring to the actual definition of treason that is contained in Article 3, Section 3 of the U.S. Constitution, which reads as follows:
Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them Aid and Comfort. (emphasis added).
The only Americans who were ever guilty of treason under this definition would have been Abraham Lincoln, his cabinet, the "Civil War" Congress, the Union Army command, and all army volunteers from the Northern states during the War to Prevent Southern Independence. Waging war against the Southern states was the very definition of treason under the U.S. Constitution.
Lincoln rhetorically redefined treason to essentially mean criticism of himself and his government. This has always been the preferred definition of treason by American statists, beginning with Daniel Webster, who attempted to redefine it as such in his famous debate over the nature of the union with Senator Robert Hayne of South Carolina. Lincoln simply adopted Webster's subterfuge while subverting the Constitution with his war.
So where does the Fed fit in here? Was Governor Perry totally off base when he said the Fed's irresponsible and reckless behavior is "almost treasonous." The Fed is not "treasonous" according to the actual definition of treason in the Constitution. But what the Fed is guilty of is being the financial handmaiden of the subversion of constitutional government in America ever since its founding in 1913. It has helped to finance all of America's unconstitutional wars and other "military adventures," for example, beginning with the Korean War. Congress no longer declares war, as required by the Constitution, and then disguises the costs of war with debt and with money creation by the Fed. Without the Fed, there would have been fewer unconstitutional wars over the past 60 years, and the wars that did occur would have been shorter.
World War I was a nightmare for civil liberties in America, with governmental goons literally imprisoning people for such "crimes" as reading the Bill of Rights in public. The Fed financed about one fourth of that war, and is therefore partly responsible for such atrocities. The same is true for World War II and all the other wars, including the most recent ones, where state power was used to trample on the civil liberties of American citizens (as always, in the name of "preserving" those same liberties for us).
World War I also introduced socialistic central planning to America with the government policy of "war socialism," which included the nationalization of numerous industries and the dictating of prices and production quotas in many others. All price controls are a violation of the contract clause of the U.S. Constitution, which prohibits laws that abridge legal contracts, such as those between buyers and sellers or employers and employees. The contract clause, and much of the rest of the Constitution, was simply ignored during the World War I years and in the succeeding decades, especially during the Roosevelt administration. The Fed was instrumental in making this possible by financing such interventions.
In his book, Takings, legal scholar Richard Epstein made the argument that both the New Deal and "Great Society" programs were all unconstitutional under the actual constitution despite the fact that generations of lawyers have created case law that essentially rewrites the document as being a toothless inhibitor of governmental powers. All of these government programs have been partly financed by the Fed.
The original Constitution listed a very few enumerated powers of the federal government in Article 1, Section 8. All other powers were reserved for the people and the states under the Tenth Amendment, which Thomas Jefferson considered to be the cornerstone of the entire document. The creation of the Fed in 1913, along with the federal income tax in that same year, was one of the final nails in the coffin of the Jeffersonian constitution. Armed with the ability to engage in legalized counterfeiting, virtually all political power became centralized in Washington, D.C. All states became effective franchises of the central government who could easily be bribed or bullied into submission with federal grants or the threat of their withdrawal.
Thanks to the Fed, American presidents can behave like world dictators, ordering the dropping of bombs anywhere and everywhere on a whim without any consent by Congress or anyone else. Thanks to the Fed, the majority of Americans are on some kind of governmental dole and are therefore neutered as opponents of the never-ending growth of government. They do not really have free speech rights, in other words. The same is true of all corporations that receive government subsidies. Or even if they do not, government has become so powerful that it can use its oppressive regulatory powers to ruin any business person who dares to speak up against the government too effectively. Thus, the Fed may not be responsible for "levying war" against the states, the definition of treason that is in the Constitution, but it has played a crucial role in the destruction of the system of federalism or states' rights that was established by the American founders. Perhaps Governor Perry can do a better job of articulating this point the next time he attempts to steal Congressman Ron Paul's thunder on the campaign trail.
Thomas J. DiLorenzo [send him mail] is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You're Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton's Curse: How Jefferson's Archenemy Betrayed the American Revolution — And What It Means for America Today.