A conversation last month between New York Sun editor (and former WSJ editor) Seth Lipsky and radio host Dawn Bennett raised some interesting points on monetary policy and the Fed:

Ms. Bennett: It is quite clear to me that the Federal Reserve doesn’t want the rest of us to actually be able to see what they really up to. If we did know what they’re doing, do you think most Americans would just want it shut down? To your point, since 1913, the dollar has actually lost over 97% of its purchasing power. And of course, the economy has been subjected to one painful depression and a series of what I call Fed-created recessions. Despite the poor track record, we continue to support them. At the end of the day, does it matter if we even have a Federal Reserve?

Mr. Lipsky: I think the monetary questions do matter to every American in all positions. My favorite statistic is that between 1947 and 1971 the average unemployment rate was below 5%. From 1971 until today it was above 6%. What happened in 1971, when the unemployment rate began souring? What happened is we abandoned the Bretton Woods Gold Exchange System, under which the dollar was linked to gold, and the money began flowing not in the productive enterprises, but into the money markets and hedge funds and all these sorts of things and not so much into the kind of investment that created the great industrial base in America.

Ms. Bennett: Let’s talk about that type of investment. According to a government report I’ve read, the Federal Reserve made $16.1 trillion in loans to big banks during that financial crisis. In my opinion, [it once] created the dotcom bubble and the housing bubble. Now, I think it has created the financial bubble that our markets are experiencing.

Mr. Lipsky: Asset inflation. The debate over inflation is one of the most important debates in the country. The left wing likes to say there is no inflation, but the dollar is worth only a tiny amount of the constitutional specie, which is gold and silver, compared to what it used to be worth. This is what people feel when they hear the government say there’s no inflation but they try to go to the grocery store and they spend $50 or $100 on a tiny plastic bag with a few items in it.”

. . . .

Mr. Lipsky: The news that the Justice Department is looking at something like ten or twelve major banks for possibly rigging the price of gold broke the same week that Mrs. Yellen was up on Capitol Hill testifying against an audit of the Fed.

Ms. Bennett: That’s right.

Mr. Lipsky: One of the questions that The New York Sun raised is what is she afraid of then? Is it the danger that the Fed has been meddling in the gold market the way the Justice Department is alleging commercial banks have been doing it? It’s the Fed that regulates commercial banks after all. I don’t want to carry that argument too far. I asked it then in an editorial more in the nature of a question. But there is a movement in Congress to open up what is called a Centennial Monetary Commission that after the first hundred years of the Fed, would just take a look at how the whole system is working.

We’ve been in a period of fiat money, meaning dollars that have no connection in law to any gold or silver or other constitutional money. We’ve been in a fiat system since 1971. Previously, our dollars were always defined in terms of gold and silver, suddenly they’re not. The unemployment average is much higher; the bankruptcy rate is much higher; the inequality rate has been much higher since the mid 1970’s. Could this be related to the fact that we abandoned sound money in the mid 1970s?

All good questions.

Paul Dupont is a legislative assistant for American Principles in Action.