The Fed diminishes your pay

by Patrick Dempsey
Published in the Mankato Free Press, April 8, 2011
Reprinted by permission of the author

VV note: Patrick Dempsey is a longtime commenter on Vox Verax, often presenting an opposing point of view. He has worked as a information technology utility consultant for 14 years, has been a fellow of the University of Minnesota Humphrey Institute Policy Forum and considers himself a libertarian.

There have been several [Mankato Free Press] My View opinions lately bringing to light that Minnesota public employees haven’t received raises in years. I was among those to take issue with these writers in online commentary claiming them to be “greedy” and undeserving of raises since I haven’t had a raise in years, as well. I was using the same basis to disagree with them by only considering the number of dollars that make up one’s compensation.

However, I recently read about a case in New York filed by a state appeals judge named Judith Kaye, who hasn’t received a raise in over 10 years. Her suit argues she should get a raise. “Just another greedy public employee,” was my initial reaction. But, as I read more about her case, I was reminded of what the Constitution says in Article 3, Section 1, “Judges, both of the supreme and inferior courts, shall hold their offices during good behaviour, and shall, at stated times, receive for their services a compensation, which shall not be diminished during their continuance in office.”

But Kaye was arguing for a raise.

Certainly her compensation had not been diminished in 10 years — or had it? Minnesota public employees are not guaranteed the same compensation privileges as judges, but the recent My View opinions bring in to clear focus the biggest threat to property rights in this country.

Forget Kelo v. New London.

The biggest threat to property rights in America is not eminent domain in relation to the takings clause of the 5th Amendment, but the devaluation of the dollar. In comparison to gold, the dollar has declined in value by 80 percent since 1980. The Federal Reserve has been printing money, and we have seen a significant rise in inflation in food and energy.

One could argue much of the strife in the Middle East over the past months is in response to the worldwide skyrocketing of food prices — a casualty of the parochial effort by the Federal Reserve to stimulate the economy through an inflationary policy.

Chairman Ben Bernanke goes before Congress and declares he’s “puzzled,” but sees no “new urgency” to stabilize the dollar.

Don’t we pay you to not be puzzled by your policies, Mr. Chairman?

Which brings us back to the Kaye suit — has her compensation been diminished by the devaluation of the dollar? Sure, the number of dollars in her compensation every year hasn’t diminished, but the value of those dollars has gone way down.

And isn’t that true for everyone, whether public sector or private sec tor employed?

So, I am rethinking my opposition to public employee raises and I owe apologies to those writers for some of my comments. Their property is under threat by the dollar devaluation just as much as mine or Judge Kaye. But we should not be marching on our Capitol to protest budget cutting that threaten the number of dollars we have in our compensation. We could all get 20 percent raises and the value of our dollars would still be in decline. We should be emailing Bernanke and remind him of what our Founding Fathers thought of fiat currency. Paper currency would “ruin commerce, oppress the honest, and open the door to every species of fraud and injustice” according to Washington. Jefferson called its abuses “ inevitable.” And, Madison went so far as to claim that paper money was “unconstitutional, for it affects the rights of property as much as taking away equal value in land.” Indeed! We might also remind Chairman Bernanke that the Coinage Act of 1792 contained a provision establishing the death penalty for devaluing the dollar.

I am not arguing for a cancellation of our paper currency economy. The post Civil War Supreme Court upheld what became known as the Legal Tender Cases, in which government issuance of paper currency was upheld as constitutional. But, in response to current Fed policies, states are starting to consider monetary systems based on gold or silver coins, which states are allowed under Article 1, Section 10.

The United Nations and countries like China are calling for the abandonment of the dollar as a reserve currency. Perhaps Judge Kaye’s law suit and the written protests in The Free Press and in places like Madison and overseas might make the Supreme Court revisit the Legal Tender Cases and bring under control the runaway devaluation of the dollar by the Federal Reserve, which threatens the property rights of every single American.

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