Bernanke’s Great Lie – The “Gold Standard” and the Great Depression

Posted by Jake Towne on May 8, 2009 under Why | Be the First to Comment

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.

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.”

While there may be a paper from the Austrian School of economics that firmly rebukes the claim in my fashion, based on the mislabeling of the term, I have not come across it (yet). However, both Murray Rothbard and Walter Block have understood this truth as well, and dropped the clues to follow.

Furthermore, there should be very little surprise that the statist forces have used this trick. Yesterday’s communist “nationalization” is today’s “conservatorship.” “Hoarders” are really savers. “Insurgents” are really guerrilla fighters; only a minority is actually “terrorists” as our political leaders consistently tell us. An unbiased observer would call a “war” whether on terror, poverty, drugs, WWII, etc. – as state-sanctioned murder and theft of property. Even the political terms “liberal” and “conservative” are terms meant to confuse and divide, as I discovered in one of my first articles “An Hypocrisy of Terms: Liberal and Conservative”. Read more of this article »