Powers of Secretary of the Treasury
John Hermann
More
information relating to the United States Code -- a
consolidation and codification by
subject matter of the general and permanent laws of the
United States. It is prepared by the Office of the Law Revision
Counsel of the
United States House of Representatives. Here is the source of the
relevant law relating to the
powers of the Secretary of Treasury in relation to those of the Board
of
Governors of the Federal Reserve that I gave previously (U.S. Code
12). - John
http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section246&num=0&edition=prelim
12 USC 246: Powers of Secretary of the Treasury as affected by chapter (Text contains those laws in effect on June 7, 2017)
From
Title 12-BANKS AND BANKING
CHAPTER 3 - FEDERAL RESERVE SYSTEM - SUBCHAPTER II - BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
§246. Powers of Secretary of the Treasury as affected by chapter
Nothing
in this chapter contained shall
be construed as taking away any powers heretofore vested by law in the
Secretary of the Treasury which relate to the supervision, management,
and
control of the Treasury Department and bureaus under such department,
and
wherever any power vested by this chapter in the Board of Governors of
the
Federal Reserve System or the Federal reserve agent appears to conflict
with
the powers of the Secretary of the Treasury, such powers shall be
exercised
subject to the supervision and control of the Secretary.
(Dec. 23,
1913, ch. 6, §10 (par.), 38 Stat. 261 ; June 3,
1922, ch. 205, 42 Stat. 621 ; Aug. 23,
1935, ch. 614, title II, §203(a), 49 Stat. 704 .)
References in Text
This chapter,
referred to in
text, was in the original "this Act", meaning act Dec. 23, 1913, ch. 6, 38 Stat. 251 , as
amended, known
as the Federal Reserve Act. For complete classification of this Act to
the
Code, see References in Text note set out under section 226 of this
title and
Tables.
Codification
Section is
comprised of sixth
par. of section 10 of act Dec. 23, 1913. For classification to this
title of
other pars. of section 10, see Codification note set out under section
241
of this title.
Change of Name
Section 203(a) of act Aug. 23,
1935, changed name of Federal Reserve Board to Board of Governors of
the
Federal Reserve System.
John Hermann
that Treasury is in the driving seat, and that it makes no sense for the Fed
to refuse to cooperate with Treasury on matters of economic policy. I can
envisage some hypothetical deficit spending scenarios if such cooperation
was not forthcoming. For example, Treasury could sell more securities to
the nonbank private sector than it really needs to accommodate its deficit
spending requirements, whereupon the Fed would have an incentive to
buy securities from the private sector in order to re-establish its control
over short-term interest rates. Whereupon Treasury would have the
option of either doing nothing further or buying back some securities.
Either way, Treasury would have effectively borrowed from the central
bank. It might seems a little machiavellian, and I am not saying that this
is likely to happen, just that Treasury has such options available to it in
theory. - John
lante...@gmail.com
Signature: My compliments and best wishes.
John Hermann
well have an incentive to buy securities from the private sector, but it would not
be in order to establish control of short term interest rates. (i.e. because deficit
spending via the sale of newly created securities does not change the volume
of reserves within the aggregate banking sector) - John
John Hermann
The US Constitution makes it very clear who controls the purse strings .. it is Congress.
Signature: My compliments and best wishes.
Yes true, however the actual spending is done largely through Treasury. Both Treasury
and the Fed have been granted certain powers by Congress. My main point was that
- as I understand it - even though the Fed is semi autonomous, it is absolutely obliged
to cooperate with Treasury on matters relating to implementation of the government's
economic policy, and that where there are differences in relation to this which cannot
be resolved by discussion and negotiation, the will of the Treasury will ultimately prevail.
- John
William F Hummel
John,
Any spending by the government requires that the balance in the Treasury’s account at the time be sufficient for that spending to clear. If its balance is too low, the Treasury must borrow from the public or await new tax revenues before it can spend.
As you noted, aggregate bank reserves would then remain approximately unchanged. Thus the Fed would have no reason to buy Treasuries in the open market, because it would lose control of the Fed funds rate, its primary monetary policy tool. So the Treasury’s only option is to borrow directly from the Fed. But I think Garbade’s paper makes it clear that such borrowing has not been an option since 1981. Before that time the borrowing was limited to a maximum of $4 billion in any time period.
I believe a financial crisis affecting the demand for U.S. treasury securities would cause Congress to waive the law that forbids the Fed from buying them directly. So MMT's claim there is no constraint on government spending also has its limits.
William
John Hermann
Any spending by the government requires that the balance in the Treasury’s account at the time be sufficient for that spending to clear. If its balance is too low, the Treasury must borrow from the public or await new tax revenues before it can spend.
As you noted, aggregate bank reserves would then remain approximately unchanged. Thus the Fed would have no reason to buy Treasuries in the open market, because it would lose control of the Fed funds rate, its primary monetary policy tool.
So the Treasury’s only option is to borrow directly from the Fed.
- John
But I think Garbade’s paper makes it clear that such borrowing has not been an option since 1981. Before that time the borrowing was limited to a maximum of $4 billion in any time period.
I believe a financial crisis affecting the demand for U.S. treasury securities would cause Congress to waive the law that forbids the Fed from buying them directly. So MMT's claim there is no constraint on government spending also has its limits.
helge nome
That is an interesting "statement" John.
Does it mean that the Secretary has no power? : )
Anyway, while we and others diligently discuss the nature of money and the powers of those that handle large volumes of the stuff,
we miss the main point of what is happening today: A massive transfer of wealth from the public domain into private greedy hands,
by using treaties, lawyers and such on an unprecedented scale.
One case in point here in Alberta, Canada:
The government of the day persuaded itself that a huge upgrade in the electricity distribution system was an urgent necessity.
(Fun Fact: The President of the ruling political party happened to be the Vice President of the company owning the electricity distribution system)
The Cabinet of the day created legislation to make itself the sole decision maker in making the project go forwards, overruling any technical advice (of which there was plenty) against the decision.
Result: A $16 billon upgrade to major trunk lines from coal power stations in Northern Alberta to feed the American power grid was completed, paid for by electricity consumers in Alberta (including me) over the next umpteen years.
Now, here is the cream on the cake: The company in question, Altalink, sold its ownership of the distribution system to Warren Buffet for $3.2 billion.
So, now, we the people, are paying Warren Buffet a guaranteed percentage amount on his investment while at the same time paying the banksters the $16 billion they created out of thin air to finance the project in the first place.
And we don't even own what we are paying for!
If that isn't daylight robbery, what is??
Helge
Sent: June 9, 2017 9:38:20 PM
To: understan...@googlegroups.com
Subject: Re: Powers of Secretary of the Treasury
John Hermann
That is an interesting "statement" John.
Does it mean that the Secretary has no power? : )
of the Secretary of Treasury and the Chairman of the Fed
are granted by the legislature and signed into effect by the
executive. The Congress giveth, and the Congress taketh
away. - John
lante...@gmail.com
Signature: My compliments and best wishes.
John Hermann
I believe a financial crisis affecting the demand for U.S. treasury securities would cause Congress to waive the law that forbids the Fed from buying them directly. So MMT's claim there is no constraint on government spending also has its limits.
helge nome
John,
Your message text is not coming through to my email.
Just three dots.
Helge
To: understan...@googlegroups.com
Subject: Re: Powers of Secretary of the Treasury
John Hermann
emails Helge, and I have no idea why you did not receive it.
Have you experienced this problem with any other postings?
- John
helge nome
This one came through fine.
Other emails from members of this group come through as well.
It could possibly have something to do with with my "hotmail" service.
Perhaps you could try a mixed message where you send a mixture of direct text and cut and pasted material?
Helge
Subject: Re: Powers of Secretary of the Treasury