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To no one’s surprise, the Federal Reserve announced Wednesday that it was raising its benchmark interest rate by half-a-percentage point and next month would begin reducing its bloated bond holdings to remove some of the excessive money it had been creating that had helped fuel the current inflation.
This segment of What’s Ahead explores why our central bank won’t even consider unleashing the most formidable, time-tested tool to keep the dollar stable in value.
With few interruptions the U.S. very successfully operated on a gold standard for 180 years, from the 1790s to the early 1970s. During that time, we achieved the greatest economic growth in history.
But for fallacious reasons, we ditched tying our currency to gold. Since then, our average rate of growth has fallen. If we had maintained our historic rate of expansion, the median household income today would be some $40,000 higher.
Yet even mentioning the subject of gold is taboo among almost all economists and policymakers. It’s the economic version of cancel culture.