Economic Quarterly

Unrestrained power to create money makes possible the arbitrary seizure of property, either through an unlegislated transfer of wealth from the private to the public sector or through the capricious transfer of wealth between individuals. Money creation -- and by implication the seigniorage that flows from it as well as the price level fluctuations that derive from it-- should be subject to a clear legislative mandate. A congressional mandate requiring the Federal Reserve to stabilize the price level and to hold only government securities in its portfolio would complement constitutional limitations on the government's exercise of power.