Exposing Faux Capitalism

On Tuesday, December 1, 2009, LewRockwell.com featured an article with the headline, “Famine or Gold Standard: Charles Goyette on the choice before us.” The article itself is entitled, “Parallel Universes,” and is a fictional account.

But wait. The U.S. was on a gold standard from 1929-1932. Did that prevent the Great Depression? No, it did not. It didn’t prevent the 20%+ unemployment, the 88% drop in the Dow Jones, nor the 5000+ bank/S&L failures during that period.

The Federal Reserve was to blame, you say? Yes, but only in part. The Federal Reserve existed while the U.S. was on a gold standard. Those two variables are conflated, and therefore, one can’t say with certainty that one was to blame and the other wasn’t, or that one factor was more to blame than the other, unless you measure the effect of each, independently of the other.