Occupy Wall St: Abolish the Fed, Back to the Gold Standard?

The Center for Popular Economics stands in solidarity with the Occupy Wall St. movement. CPE economists have been doing teach-ins in NYC, Boston and Amherst. We have also developed some resource materials on important issues that have been raised by some protesters. (See links below.) The demands to abolish the Fed and to return to the gold standard are frequently heard. It is true that the Fed favors the interest of the banks, and is plagued by a lack of transparency and accountability. However, the Fed serves an important function and rather than destroy, we need to democratize it. A return to the gold standard is not particularly good for the people – it was the Populist movement that demanded an end to the gold standard and the establishment of a Central Bank in the first place.

In 1896, Populist firebrand William Jennings Bryan declared, “If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. We shall answer their demands for a gold standard by saying to them, you shall not crucify mankind upon a cross of gold.”

An Intro to the Federal Reserve – 2 page handout (pdf)

Federal Reserve – a Historical Perspective – 4 page article (pdf)

 

5 comments

  • Returning to a gold standard (which we never fully had in the first place), would cause massive deflation and a depression, as the supply of gold would never be enough to satisfy our growing need for money. That is why, and later, Nixon, took us off gold in the first place.
    Now, it is true that the Central Bank serves first (or maybe only) its member banks, but there are several solutions to that:
    1. Greenbacking: following the constitution to “coin Money” Article 1, section 8, as first practiced by Lincoln to fight the Civil War. The original Greenbacks ($450 million) were issued when NYC banks wanted 24-36% interest. Congress can produce U.S. Notes again, at any time, for any reason, in any amount. Check out Kuncinich’s HR2290 bill to do that, plus subsume the Fed into a department under Treasury etc.
    2. Land Value Taxation: Tax the Value of Land, not the wages of people. Tax takings, not makings. This 132-year old idea would shift taxation to location and resource use/abuse, instead of wages, sales or true capital (all of which we want more of, so why tax it?). See the website above.

  • William Jennings Bryan is perhaps not the best quote to end on. Per Goodwyn’s book on the Populist Movement, Bryan was more of a co-opter than a true Populist. His backing was in the Western mining interests, whose preferred solution to the “cross of gold” was to replace one bar of the cross with a bar of silver. The actual Populists had much more advanced ideas – generations ahead of their time.

  • There is no example in all of history of a fiat currency leading to prosperity.

    paper money ends up worthless every time.

    Anybody who encourages paper money is either an enemy or a fool.