With the celebration of its 100th birthday, the Federal Reserve has received a share of criticism from many quarters. In particular, the Conservative or Tea Party republicans are attacking the Fed for a unique reason; they believe it is time to bring back the old gold standard to help the economy thrive in hard money. The Tea Party wants to borrow a leaf from the 19th Century where; all power and wealth was reserved for the top corporate elites like the Wall Street financiers. The age of hard money was often referred to as the age of savage inequality.
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The last bond with the precious metal was before 1913 when the Federal Reserve subsequently cut the cord. The last ties with gold were cut in the era of President Nixon in 1971. Despite flexible money being accepted across the board, the conservatives have remained firm in the conviction that gold is the sure way to run an economy. Many personalities have jumped into the bandwagon to advocate for the return of the gold standard. Among others; TV personality Glenn Beck, financial giant Steve Forbes and Tea Party pundit William Kristol have not been shy to air their love for gold publicly.
Conservative politicians have been in the forefront to advocate for this cause. In fact, republicans of South Carolina and Utah have already passed the laws to endorse the gold standard as a currency. The Tea Party insists that this gold currency is the answer to countering inflation and averting a financial crisis. According to their philosophy, gold is the sure stability to volatile economies. However, it is common knowledge that gold is prone to speculation and the prices have in fact been up and down in the past five years; raising eyebrows about the ability of gold to be the firm anchor in times of need.
History reminds us of some of the worst economic troubles where gold was the standard. In fact, gold played a key role in dividing the country politically and reserving power and wealth to only the corporate few. In the early years, the gold hard coin was preferred over bank notes which were prone to manipulation. However, as people lived away from the leading financial centers like New York and Philadelphia, the more the times got harder. This means that the hardest hit people were farmers and common workers.
William Jennings Bryan a powerful orator and former Nebraska congressman became the voice of the working majority against the gold standard at the end of the 19th Century. On the ground, gold was only good for those who controlled it. Otherwise; for workers who needed loans for farms or mortgages were forced to pay a higher price as the gold value took their debt up with it. In simple terms, the poor became losers in a gold economy while the elite had the advantage to control wealth; brewing an environment of inequality. This saw the rise of anti-monopolist movements who lobbied for change with this respect.
The main problem with gold is that it was scarce because mining it was by any means luck. After it was mined, speculators and hoarders were ready to make a killing out of it. A real currency needed to be versatile and reliable; and this was the main agenda for the anti-gold movements. At the same time, conservatives stood their ground as they continued to advocate for gold. Businessmen, politicians and academia elites were at the forefront of their advocacy. They were not about to let their preserve of wealth melt away in a free currency economy.
It was until the regime of Woodrow Wilson that the demand for monetary freedom yielded some fruit. Consequently, the Federal Reserve Act of 1913 was created; making money supply more flexible and regulated. In the modern day, most economies have paper currency that is reinforced by the power of the government. In this regard, there is little chance that the US will revert back to a gold standard economy. The old gold standard is part of a monumental history.
Despite the historical factors and lessons, modern gold currency supporters continue with their gospel. In fact, many conservatives warn that it is either gold or the abyss. Their conviction is inspired by their conservative ancestors who had mastered a way to preserve wealth and power in certain circles hence controlling the country remotely. In this regard, the Fed is at crossfire with the conservatives who are advocating for a gold standard. In actual fact, this is perceived to be a way to enrich the haves and ruin the economy for the struggling working economy.
Historical evidence has shown that a gold currency economy can effectively favor banking corporations as well as Wall Street financiers. For those who are paying mortgages and have student loans, such an environment works to choke many. In addition, the hard money will justify the cutting of funding on different vital sectors like health and education. The Federal Reserve is marking its 100th birthday with a handful of friends and a host of enemies.
The Fed has loosened its regulatory grip over the years to entertain speculation that has played a part in enriching banking entities. This was the recipe for the financial meltdown; which affected those who are low on the power graph. In this regard, enemies continue to be made owing to the thriving of its policies which have reinforced the empowerment of Wall Street financiers to the dismay of the common citizen.
Gold is certainly not a fix when it comes to the disability of the Federal Reserve. As a matter of fact, the gold idea is meant to drive the poor further down as the rich continue to accumulate power and wealth. It plays a role in helping the wealthy retain their influence in an economy that can potentially swallow their wealth if liberal measures are taken. It then becomes a political mix of personal interests which started brewing when the Fed loosened its grip regarding policies.
This is a discourse that continues to be fueled by many views; the ideal situation is to have a free economy that favors both the poor and the rich; an economy that serves all people to discriminate selfish interests of the few.