Running Head: SHOULD THE US RETURN TO THE GOLD STANDARD?

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Should the US Return to the Gold Standard?

Marvin Arce

Brandman University

December 11, 2016

Professor De Soiza

SHOULD THE US RETURN TO THE GOLD STANDARD? 2

Should the US Return to the Gold Standard?

It is no secret that the economy of the United States is slowly declining and incurring

more and more debt with every coming year. Many people are simply not informed about who

controls the financial system in this country and do not realize they are the one’s paying for the

debt through taxes. In this essay I plan to propose an answer to the question, “Should we return to

the gold standard?” How important is it for the average citizen to understand what a stable econ-

omy should look like? Most people get confused by the numbers involved in economics and tend

to avoid worrying about it. It is for this reason that banks, corporations, and banking cartels

profit from the ignorance of the average citizen, and the fractional reserve system in place allows

for the continuous control of our wealth. Having a gold standard would prevent the raising and

lowering of interest rates that is now common practice whenever the economy needs a boost.

This, in turn, allows for the Federal Reserve to increase or decrease the flow of currency to fit the

needs of the economy. For every dollar that the Federal Reserve Bank prints, the nation incurs

the debt with interest. It is crucial for the people of our nation to understand this, because it is the

basis for the reimplementation of the gold standard.

Whether or not the US should return to the gold standard is heavily debated. On one

hand, some people would claim the economies of today cannot work under the gold standard.

Many people have stated that the gold standard eventually failed on its own. The opponents of

the gold standard have supported the Federal Reserve Banking system as the supporting institu-

tion for our economy. For decades, it has been solely responsible for monitoring the monetary

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system of America. The gold standard was blamed for the Stock Market Crash of 1929, as people

felt that the standard itself starved the economy of money, (Melloan, 2012). There were argu-

ments still for placing the blame on the banking system of the time that could not meet the de-

mands of people recalling deposits at a volume too high for the banks to keep up with. The na-

tion was hindered at a time when loans were helping Americans create a future by investing in

themselves and their communities. Agricultural decline had an impact on the economy as well,

as many people were not working and businesses were failing all over rural America.

I have been intrigued by this topic for almost 10 years, since I was fortunate enough to

have been enlightened by some colleagues. As a young adult in my 20’s, I was unaware of many

obstacles that prevented me from wanting to make a change to our economic policies. I now

know that the Federal Reserve Bank is not a government entity. It is a privately owned bank that

distributes the interest paid by citizens on the money loaned to the government, as profit to its

shareholders. I have learned that there have been political decisions to attack and depose leaders

of nations, such as Libya and Iraq, to prevent the rise of currencies other than the American dol-

lar in their nations. Muammar Gaddafi had stated that his vision was to introduce to Libya a gold

Dinar that would, in effect, transfer the wealth into the hands of the people and away from the

banking cartels. These ideas have been debated upon, as many people believe that the tyrannical

rule by Gaddafi and others is what caused American intervention. Missions to remove leaders

like Muammar Gaddafi and Saddam Hussein have been strongly favored by the Central Banking

System that the Federal Reserve is part of because of fear that the world would begin to shift

away from using American dollars as the primary global currency.

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Although many people share the belief that the gold standard is the answer for America

to restore prosperity, misinformation has led the majority of citizens to rely on the fractional re-

serve system we use today. Melloan (2012) believes that gold has actually been a stable form of

currency throughout history. He believes that negative opinions about the gold standard have

misled people. Many people, like Ron Paul, Gerald Celeste and others, have expressed that a re-

turn to the gold standard would be the best answer for our economic crisis. In the past, it has

been a subject not many like to mention. Among our highest ranks, the idea has consistently been

rejected as we have seen presidents like Barrack Obama continue to allow our economy to be

managed by the Federal Reserve Bank. Because of people like Ron Paul and George Melloan,

we are seeing a rise in people willing to stand out and suggest the gold standard as viable option.

Opponents of the gold standard argue that the gold standard is outdated and too simple

for the modern economy to adjust to at this stage. It has been referred to as “a barbaric relic that

belongs in the dustbin of history” (O’Brien, 2012). It is quite convenient for supporters of the

fractional reserve banking system to influence majority vote in favor of the Federal Reserve

Bank. Many people, such as former Federal Reserve Bank chairman Ben Bernanke, believe the

raising and lowering of interest rates is good for the economy. They argue that the gold standard

had previously hindered the government’s ability to print money when the economy needed it.

Such practices are the reason we are in such a great debt. Simply printing more money or adjust-

ing interest rates does not fix our debt problem or any problems within the economy. The gold

standard would not allow such fluctuation in the currency’s value and would force the govern-

ment to be fiscally conservative and debt conscientious. Other opposing views are that gold is

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actually a cause of great greed. Historical events, such as the California Gold Rush and the ex-

ploration of the African and American continents, were motivated, in large part, by the need for

governments to add to their gold supply. This argument is difficult to refute because I can per-

sonally agree that the massacre of native Americans during the great Western colonization was

unethical and it can all be related to the appropriation of gold. However, the type of greed and

fraud made possible by the fractional reserve banking system has proven to be as profound as the

type motivated by the acquisition of gold. The system in place today is more covert in its ways

but still as dangerous as any other system designed to appropriate the wealth of a society.

It is not a simple task for us to reverse the way we manage our economy. There are laws

in place to protect the system that we use, such as the Federal Reserve Act of 1913, signed by

Woodrow Wilson during his term as president. If one can understand the nature of this document

and the ways in which it has removed the wealth of our nation from the hands of the people, then

we can formulate a plan to restore it to the people. After several attempts to create a central bank

in the United States, finally Woodrow Wilson signed one into existence, later regretting his mis-

take as he is quoted as saying that he felt he had single-handedly ruined his country. Having

known of the dangers of a centralized bank, he allowed thru the Federal Reserve Act the control

of our currency by our system of credit. The growth of the nation, therefore, and all its activities

in the hands of a few men. The words of the president who signed into existence the federal re-

serve and lived to regret it should be taken seriously. Unfortunately, it has been 100 years, and

we have still not done anything about ending the Federal Reserve Bank and repealing the Federal

Reserve Act of 1913.

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Many presidents and politicians were in favor of the gold standard and many have not

been in favor of the gold standard but definitely opposed the Federal Reserve Bank. Ron Paul

has warned recently that financial collapse under this fractional reserve system is imminent and

suggested that it may be too late to avoid. He warns that the severity of our current economic

state is largely unseen by many people because of the Federal Reserve Bank’s ability to create

massive bubbles by adjusting interest rates and printing more money. Many people in America

have come to accept the use of these terms in their daily lives and never question the cause for

them. When people hear the world inflation, they are not aware that it is caused by the printing of

currency that devalues the currency already in the economy. I was one of these people who was

not aware of the system’s perfect operation that has continued to work in favor of the privileged

few in control of our economy and the economies of numerous nations across the world.

The gold standard was, at one time, the foundation for a strong American economy that

led the world and stimulated financial growth for all nations. Since the Federal Reserve Act of

1913, the nation has slowly changed and entered into debt so great that it may never be repaid.

The nation, to be more specific, the citizens are indebted to a privately owned bank and may only

repay their debt with money borrowed from the same bank, as the true wealth in gold has been

detached from the money in circulation. The only way to reverse this endless cycle is to abolish

the Federal Reserve. This would drive an economy based on a truly free market where interest

rates are not controlled by a bank and the government is not at the helm of the American econ-

omy. A return to the gold standard would be difficult to adjust to and would cause many people

to fall below the poverty line, but it is necessary to eventually free the nation and its people from

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the current financial trap. I support the gold standard as a way to restore our economy and be-

lieve that abolishing the Federal Reserve will free us from the debt owed to the banking system,

allowing us to control our economy the way that it was intended by our forefathers.

I am convinced that the current monetary system is not right. I have been shown the way

people can be conditioned to not question the way things are being managed for them, such as

our economy. Many countries in the past has successfully used the gold standard and it was not

until they made the mistake of going off of the gold standard that they began to see the control of

their economies fall into the hands of the banking cartels that were at the head of the banking

systems they put in place. It is my opinion that the gold standard could be a true economic revo-

lutionary change but still feel that the real problem with our economy is not just the lack of value

backing our currency. It is the control of the banking elite that has led us to the dire situation we

face today, and returning to the gold standard could help us recover. However, unless we remove

them from power, we will not be able to sustain our economy. It is the debt that the Federal Re-

serve Bank creates that will perpetually keep us without while our wealth escapes our hands and

our communities to these people that have been benefiting from their system for far too long. It is

unclear whether a return to the gold standard would cause the necessary change that would bring

us back to financial prosperity without the abolition of the Federal Reserve Bank or if the gold

standard would even be feasible in today’s environment. While, the future of our economy is in

the hands of the people, the system of currency is in the hands of the Federal Reserve Bank. Only

after we abolish the Federal Reserve Bank, will we be able to implement a sound economic sys-

tem that will allow us to thrive using sound money and fiscally responsible practices.

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References

Askari, Hossein; Krichene, Noureddine. (2016). 100% percent reserve banking and the path to a

single-country gold standard. Quarterly Journal of Austrian Economics. 29-64.

Melloan, George. (2012). Let’s return to the gold standard. The American Spectator. Retrieved

from https://spectator.org/36196_lets-return-gold-standard/

Morys, Matthias. (2014). Gold standard lessons for the Eurozone. Journal of Common Market

Studies. 52 (4), 728-741.

O’brien, Matthew. (2012) Why the gold standard is the world’s worst economic idea, in 2 charts.

The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2012/08/why-

the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/

Selgin, George. (2015). Low, legislation, and the gold standard. CATO Journal. 92. 1-14