To make a long story fairly brief, President Hoover began the ill-fated government-assisted economy called the ‘New Deal,’ which FDR fanatically continued. FDR ended the “classical” gold standard with his theft by force of America’s remaining coin bullion. On March 5, 1933, he cajoled the American public to return their gold coinage to the banks. On April 5, 1933, he made the private ownership of gold illegal and demanded that all remaining gold be surrendered to the government. The next step was obvious, as Milton Friedman and Anna Schwartz wrote in A Monetary History of the United States, 1867-1960, FDR devalued the dollar from $20.67 to $35.00 per troy ounce….
Posted October 7th, 2009 by Jake Towne
The claim that the “gold standard” caused or worsened the Great Depression debunked.
(If you like this article, a more formal paper version of this article may be downloaded here. Please distribute if you see fit.)
The purpose of the following is to argue that the “gold standard,” as understood by most of the public, did not cause or worsen the Great Depression as current FED Chairman Ben Bernanke has based many of his papers, speeches, and, to a large extent, his entire career on. In our contemporary times, I do believe this blame must be firmly rejected and monetary policy should, at the very least, be debated in a national forum. Indeed many other economists, such as the Friedman family, Anna Schwartz, Alan Greenspan, and Jeffrey “Shock Doctor” Sachs, have all propagated this lie. (photo)
My premise is simple. I charge that these renowned Keynesian and Friedmanite-Monetarist-Chicago-Shock-School economists have consistently used the term “gold standard” to mislead their audiences and readers. For the sake of brevity, I will focus on Mr. Bernanke as he is the current standard-bearer of the FED’s fiat monetary system. Frequently, these economists do concede there are differences, but instead of clarifying they muddy the waters. For instance, in his 1990 NBER paper Bernanke frequently refers to an “interwar gold standard” and in his 2002 salute to Milton Friedman he acknowledged that “the gold standard was not adhered to uniformly as the Depression proceeded.”