1. That there’s no evident effect on inflation is consistent with the hypothesis that QE does nothing. 2. Why does the Treasury need “support?” QE is essentially debt management, which the Treasury can handle on its own.
Steve misses one point, Treasury needs coinage taxes, the Fed has that power.
So there is at least the need to get a nod from the Senate. The Treasury needs the equivalent of a fiat tax, but it cannot tax the banks without House approval. It is a catch 22. The original idea was this voluntary bank association agreed to pay the coinage tax. But if QE is handed back to treasury, that contract is null and void, that means banks have voided the coinage tax agreement. Due Process prevents Treasury from re-instituting the tax onto banks without House approval.
Treasury does inherit the inflation tax, double spending, within some acceptable range determined by the first lawsuit from the House. So it is not quite as reversible as Steve would like. Coinage power does not come with complete bank regulation power as the shadow banks system illustrates, banks need legislation to be reigned in. In its fundamental form, coinage power permits double spending, and that is subject to legislative restrictions in the power to tax. But, the ambiguity between legislated taxes and inflation taxes has nothing to do with banks, the ambiguity is for the Supremes.
The easiest exit is for Treasury to sell S/L monopoly powers to the central association of Due Process bankers. The price is a monopoly fee can that can be fixed as a percentage of cash flow. Then leave the inflation tax completely to Treasury, Senate, House and the Supremes, leave the banks out of it entirely. Make sure that monopoly fee holds in a long time lock, it is the ticket to independent central banking.
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