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According the to United States Constitution Article 1 Section 8,

The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin, ...

But it is the Federal Reserve, not Congress, who is currently "coins Money" and defines exchange rates for foreign currencies.

Why isn't it a constitutional violation?

  • It's a bit hard for any single country to define exchange rates for foreign currencies, especially if the other country isn't cooperating. Chalk that one up to a misunderstanding of economics. – MSalters Feb 19 '18 at 8:09
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It's not a violation because Congress created and gave the Federal Reserve the power to issue Federal Reserve Notes in the Federal Reserve Act which created the Federal Reserve. More here on the relationship between Congress and the Fed: https://www.bloomberg.com/view/articles/2017-09-27/how-congress-governs-the-federal-reserve.

  • Does it mean that Congress had transferred its consitutional right to "coin Money" to the private bank in 1913? – zer0hedge Feb 18 '18 at 18:00
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    Well, only the Treasury department prints money, so no. Saying the Fed prints money is misnomer. The economic growth, for one example, produced by high liquidity caused by certain Fed policies (e.g. expansive monetary policy) is like adding money to the money supply and when the Fed purchases Treasury bonds and various securities from banks and replaces them with credit, it is like "printing money." However, no violation of any Constitutional provision. – A.fm. Feb 18 '18 at 18:08
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    Congress only runs into a delegation problem if the guidelines it provides administrative agencies is too vague so that it essentially has delegated legislative power. If it sets up the structure and allows agencies to fill in the details (simplified explanation), then it will not be seen as a delegation of legislative power and will not be a violation . – A.fm. Feb 18 '18 at 18:18
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    Good point, @cpast. Zero, I don't know what you are distinguishing there, because why would the US Treasury print euros ever under any circumstances? The way this all operates is a give-and-take of interest rates, debt, securities, etc. Far too much to explain to its fullest extent here. The Treasury prints how much it needs to print to fulfill its duties of ensuring the nation's financial security. – A.fm. Feb 18 '18 at 19:43
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    @zer0hedge In all cases under Article I, Section 8, "The Congress shall have the power to . . . " means that the "Congress shall have the power to enact legislation to be carried out by the Executive Branch to . . . " The phase was never contemplated to mean that members of Congress would, for example, run printing presses to print currency. – ohwilleke Feb 19 '18 at 17:51

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