50 years?! No. People would adjust in 2 years. Rip that bandage off! Start with getting rid of the central bank. Congress take back duty of coining money. Prices translated to new money supply (notes backed by precious metals), and its done.
If you will go back to reread James Madisonās Notes of the Debates of the Federal Convention of 1787 (the Constitutional Convention, at which Madison took verbatim notes in shorthand and then transcribed) you will discover that the Founders, Madison included, voted not to give (nor explicitly prohibit) Congress the power to charter a national bank (such as the Fed).
Then, along came the War of 1812 and the president, one James Madison, no less, signed the legislation chartering the Second Bank of the United States, the precursor to the Fed. Because, you see, the baby United States had to finance its defense ā the redcoats having burned the Capitol ā and that was the only practical means of doing so.
Donāt get me wrong, Iām not a Fed-hugger. That said, there is no need to abolish the Fed (which would exhaust a great deal of political capital, even if politically possible, which is questionable). The Fed was originally chartered to capably operate under the classical gold standard and it worked just fine.
Until the world went off the gold standard during WWI and, thereafter, with the interwar gold-exchange (exchange as in currency) at Genoa in 1922. That was the original sin that led to the Great Depression and the monetary disorder that has plagued us thereafter, especially when Nixon failed to revalue and restore the dollar in 1971-1973.
I have written exhaustively (you can google my name and āthe gold standardā if you care to get the specifics) about how and why to restore the classical gold standard. It would be shockingly easy to do. We know how. And there are reasons to believe that Mr. Trump would be receptive to this if properly advised.
To wonderful effect: (to quote Donald Trumpās victory speech): a golden age for America.
Ending the Fed is a sideshow, letās stay in the main ring of this circus until we have persuaded the president to reestablish the classical gold standard that made America great in the first place. You can tangle with the Fed later if youāve got the motivation and resources to do so. First things first.
Thank you for this thoughtful meditation, some of which I respectfully but emphatically disagree. There is nothing wrong with fractional reserve banking, and, in fact, itās a good thing. Arguing against it is like arguing that insurance companies need to keep 100% reserves against the value of the homes they are insuring. Which is not merely impossible. Itās silly. Murray Rothbard was way off base there.
@ralphbenko We will disagree on that because fractional reserve banking is cheating in weights and measures, plain and simple and is a dishonest practice, and it is inflationary by definition. Yes, I agree the Federal Reserve established in 1913 when it was redeemable in silver or gold had a very low inflation rate and was therefore fairly stable at around 2% per year. But it was still inflationary and was a fraudulent pyramid scheme perpetuated upon Americans who were told and believed that the money they deposited in the bank was there for them to take back out any time they wanted. In actual fact, only a fraction of the money deposited was actually in the bank and the rest was loaned out to someone else. It SEEMS all fine and dandy while people have faith in the banks and the economy and donāt ask for their money, but when their confidence is shaken and they feel safer having the silver and gold in hand than in the bank, then everyone runs to the bank asking for their money and the fraud becomes apparent because the bank doesnāt have it and has been cheating in weights and measures saying they have everyoneās money when they donāt! that is how innocent people lose their entire life savings through no fault of their own through fraudulent and deception banking practices called fractional reserve banking. If we were living in an earlier age when our money was still backed by gold and silver, I would tell you to go up to some person who lost their money due to a run on the bank and explain to them why he was not able to take his hard earned silver and gold money out of his bank account after depositing it and who has now lost their lifeās savings and tell him he is not a victim of fraudulent bank practices, that it is not a form of theft and there is nothing wrong with it. Go ahead and tell them that their becoming financially destitute because of fractional reserve banking was a good thing! I am pretty sure they would have some words for you in response that it is not polite to mention in decent company.
Murray Rothbard was spot on in his condemnation of fractional reserve banking and it is an insidious practice that is sinful and abhorrent. I am fully aware that modern economic theory has the truth twisted and distorted so that people thing that what is right is wrong and what is wrong is right, but I am not one of them and I see fractional reserve banking for the evil that it is and I see the harm it does in society. So I leave off as I began, we respectfully disagree on that issue.
You are welcome for my meditation I supplied previously and I do agree that politically, repealing the Fed at this point in time, may be unlikely. I also recognize it is not technically necessary to repeal the Federal Reserve Act to go back onto a gold and or silver standard. We did have it concurrently with the Fedās existence and having Federal Reserve Notes backed in and redeemable in silver or gold would be much better and much more stable than what we have now so even that would be an improvement!
@IamJohnGault I mentioned 50 years as a slow and gradual plan to somewhat gently ease us back to 1900 prices and an equivalent money supply. It has taken over a century of mostly slow and gradual inflation to get us from 1913 to 2024. Though I do admit, I have little faith in the political establishment to stick with a reduction in money supply over a 50 year continuous period without being tempted to expand the money supply and take us back in the wrong direction.
As such, I, like you, am more inclined to a "ripping the bandage off method and doing it literally over night but that would take a firm use of federal authority, not all of which would necessarily be constitutional to implement fully to cause a full monetary reset back to 1900 price levels.
Ralph is correct that there is another way of simply returning to the gold standard that is much less painful and just as instantaneous. The down side is we would no longer be using the Constitutionally defined dollar and would instead adjust modern prices to the current value of gold (and/or silver). This method is perhaps more practical, but I dislike it because I hate the idea of our modern day prices being what is embedded as the fundamental price structure of a new gold standard. Iād rather see prices go down rather than maintain at the same price they are today. Although compared to the inevitable increase in prices over time with fiat currency, even freezing at current levels would be a welcomed improvement and I would support it barring any other alternatives. At least prices would be stable over time which they are not currently.
Gold is only one part of fixing our monetary policy. We need to:
- End fiat currency.
With the American dollar in decline, now is the time to return to a silver- or gold-backed dollar which cannot be inflated overnight. Modern monetary theory (MMT) is a worse blight upon our monetary policy than wokeism has been to our branches of government. When the Fed can quadruple the money supply overnight, it can single-handedly destroy the social contract of our country.
- Reform Fed governance.
Bring in radical transparency, accountability, and new checks and balances. Monetary policy is equally as important as lawmaking in creating a thriving society. We have checks and balances on congress (lawmaking), but we have no checks and balances on the Fed (monetary policy).
- Decentralize the Fedās power.
Pass laws to ensure that we never have a Central Banked Digital Currency, never have a Digital Dollar, never have a Social Credit Score, and no longer have traceable transactions.
Letās make our money great again!