Dear DOGE, Help Us End the Fed!

“In the long run, politics, culture, and the economy are indivisible.” – Taking Back Our Money

As DOGE winds its way through the maze of government buildings in Washington, D.C., identifying billions in waste, fraud, and abuse, many have shifted focus to the state of America’s gold reserves, wondering if the tentacles of corruption haven’t already found their way to Fort Knox, America’s largest reserve of gold bullion, totaling in the trillions of dollars.  Its last known audit was performed beginning in 1974, causing Elon Musk to suggest a live walkthrough to see if its inventory still exists. If he does, let's hope he finds more than Geraldo Rivera did when he opened Al Capone’s empty vault in 1986. 

In Murray Rothbard’s 2024 book, “Taking Back Our Money”, the Mises Institute reprints a three-part series of articles originally published in The Freeman magazine in 1995.  A primer on money, the banking system, and how the Federal Reserve and central banking made money a monopoly of the state, Rothbard shows why ending government control of the money supply will return America to sound money.  The gold standard ended in 1933 when FDR confiscated gold from Americans, and it was finished for good in 1971 when Nixon ended the gold standard for the international dollar, leaving fiat money as the key currency.  Its unfortunate demise handed more control of money to bureaucrats in Washington. 

Money should never have become a function of the state. Its creation began as a natural result of markets needing a medium for exchange. Initially, banks functioned as a warehouse for money, lending out capital from profits and savings, while markets determined the supply and demand of products and services by responding to consumer needs. 

In the United States, the Constitution strictly prohibits paper money, with only gold and silver approved for legal tender.  Yet, unsurprisingly, the government’s intervention in the money supply created all the same problems that central planning and price fixing brought elsewhere.  Today, its ongoing manipulation of the money supply has resulted in bubbles, inflation, booms/busts, and the inevitable growth in government. 

Ironically, the creation of the Federal Reserve has done the opposite of what was intended.  Rather than control inflation, regulate the financial system, and maintain solvent banking, it has been the creator of the boom/bust cycle by lowering interest rates below market levels, thus distorting the market, putting investors at risk by creating a fake boom, only to be corrected with a market bust.  Since new capital is rooted in savings, government-directed booms are created without new capital or an increase in productivity.  When new money is produced, prices begin to rise, but new money ends up in politically connected hands first, granting the wealthy more money to manage the subsequent higher prices.  The unconnected suffer the most with higher prices on their fixed incomes.  The result is a redistribution to the rich at the expense of the poor. 

In a perfect world, free markets would drive interest rates, resulting from the supply and demand needs of businesses and consumers.  Instead, the Federal Reserve manipulates interest rates to micromanage the economy.  Since government dollars can be duplicated, inflation of the money supply leads to increased prices and devaluation of the dollar.  This manner of counterfeiting, by increasing untethered fiat dollars into the economy, results in more money chasing fewer goods, driving up prices, and making everyone worse off.  As such, inflation is caused by the very entity charged with battling it. 

At the heart of unsound money is the Fractional Reserve Banking system, which allows the banks to hold only 10 percent of deposits, meaning there is not enough in-house money to cover the deposits.  Central banking supports this manner of banking by acting as a backstop.  The FDIC, created in 1933, is also a false front as it holds less than 1 percent of the deposits it insures.  With 100 percent banking, there would be no artificial increase in the money supply, and banks would lend out only what they have. 

No central authority is needed to control money.   To end the government’s control over banking and money, Rothbard provides a simple solution.  End the Federal Reserve and privatize the money supply.  The abolishment of the FDIC is next, unnecessary once banks return to 100 percent reserve banking.  Returning to the gold standard will restore the US to sound money.  Since gold is rare and costly to mine, there will be little opportunity for a radical increase in its supply.  A return to a government gold standard will require that the entire stock of gold be minted into coins and used as the circulating medium of exchange.  A preferable step would be free market pricing, where the price is linked to the market price of gold, and not fixed by government decree. 

When DOGE finally makes its way to the Federal Reserve for audit and recommendation, it will undoubtedly blow open the corruption of the money supply once and for all.  Ending the state’s control of money would put the final death knell to waste, fraud, and abuse in Washington.