by Jonathan Decker
This week, Congressman Alex Mooney (R-W.Va.) reintroduced legislation to make a U.S. dollar convertible into a fixed weight of gold. Much in the spirit of Jack Kemp’s Gold Standard Act of 1984, the bill restores integrity to American wages by re-committing the federal government to the promise that Richard Nixon broke in announcing the closing of the “gold window” in 1971 — that a dollar today would be worth a dollar tomorrow.
The introduction of Congressman Mooney’s gold standard legislation was met with immediate praise from the grassroots conservative organization FreedomWorks. It also received support in the American Thinker in an article by Nathan Williamson:
The bill’s introduction carries added weight this year after President Trump announced his intention to nominate gold standard sympathizers Stephen Moore and Herman Cain to the Federal Reserve Board of Governors. While monetary policy is not a subject currently receiving much consideration in the halls of Congress, the Trump administration has sent signals that it is an issue on its radar by putting forth such unconventional, sound-money nominees.
With Congressman Mooney reintroducing this bill at a time when our president appears to be on a crusade to deliver real, meaningful reforms that will make the Fed more transparent, accountable, and pro-growth, Mooney has provided the fuel needed for Congress to have its discussion on monetary policy. It’s time for Congress to match the Trump administration’s commitment to a stable dollar.
As Williamson notes, President Trump’s efforts to install Herman Cain and Stephen Moore on the Federal Reserve Board was a shot across the bow for our monetary status quo. Kudos to Congressman Mooney for picking up the torch left from their nominations by putting forward this bold legislation.
It’s time for Congress to resume debate on monetary policy and the workings of the Fed. Aside from the Fed’s extreme failure to keep the value of our money stable (as evidenced by the dollar losing over 95 percent of its value since its inception), other practices of the Fed should be reexamined too. Stephen Moore wrote:
Meetings are held behind closed doors; statements are carefully crafted to reveal little in the way of what monetary authorities actually think; and the day-to-day activities are shielded from audit.
Fed transparency would be good for the economy and for investors. If financial markets knew in real time what the Fed was doing with its open market operations, there would be less uncertainty and guesswork about interest rate policy. Transparency allows for more accurate information in a timely manner and less mal-investment.
This is truer today than ever now that the Fed has expanded its charter. Bloomberg Markets magazine found that in the aftermath of the 2008-09 financial meltdown, the Federal Reserve issued $7.7 trillion in undisclosed loans to struggling financial institutions — far more than the hundreds of billions that were allocated to banks through the Troubled Asset Relief Program bailout.
In fact, it also was more than double the total federal expenditures for 2008, which stood at nearly $3 trillion. How was it decided which private institutions got the life raft and which ones were allowed to drown?
Rep. Mooney’s gold standard act is a great launching point for a discussion on how to maximize economic growth through monetary policy. It’s time for Congress to address monetary reform and usher in a new era of accountability, transparency, and dollar stability at the Fed.