Who Will Take Responsibility for Our Monetary Catastrophe?

Today the Bernanke-Yellen-Powell fiat dollar won’t fetch one 1,845th of an ounce of gold. The stage is now set for Congress to use the monetary powers it was granted by the Constitution.

Via Drudge Report
Treasury Secretary Yellen on the Drudge Report on June 1, 2022. Via Drudge Report

The photograph at the top of this afternoon’s Drudge Report of a dazed-looking Janet Yellen certainly got our attention. As did the headline that she “Admits Inflation Out of Control.” It sent us back to one of The New York Sun’s most talked-about editorials, “The Female Dollar.” It was triggered by a New York Times story headlined “In Tug of War Over New Fed Leader, Some Gender Undertones.”

The gist of the Times story was that the battle over who was going to be the next Fed chairman — this was the summer of 2013 — had come to be a fight between, on the one hand, the former president of the San Francisco Fed, Mrs. Yellen, and, on the other hand, Lawrence Summers, an acolyte of Treasury Secretary Rubin. Or, as the Times put it, “between the California girls and the Rubin boys.”

The editorial got quoted by the Wall Street Journal. That sent Professor Krugman into a terrible swivet. He accused us of “sexism” and of harboring “strong gold bug tendencies.” We pleaded innocent to the first charge and guilty to the second — meaning, we’d be delighted to see a woman take the helm of the Fed. Yet we saw Ms. Yellen as even less likely than Mr. Summers to pay attention to the dollar’s value in terms of specie.

And here we are. Today the Bernanke-Yellen-Powell fiat dollar won’t fetch one 1,845th of an ounce of gold. It has shed 31 percent of its value in gold specie just since the year Ms. Yellen began her chairwomanship of the Fed. She had famously missed forecasting the financial collapse of 2008. She also belittled prospects for the inflation that today she admits is out of control. Secretary Summers looks, relatively speaking, like a sage.

Ms. Yellen, of course, is not the only one who has been heaping ashes on herself. Her successor as chairman of the Fed, Jerome Powell, also missed — or belittled — the warnings of the current inflation. It strikes us as time to wonder whether either one or both of them might do the manly, or womanly, thing and resign. If they don’t, who will take responsibility for this catastrophe?

What, one might ask, about the President — or Presidents? It was Presidents Obama, Trump, and Biden who elevated these failed monetary leaders to high office. Then again, too, it’s not in the constitutional construct for the President of the United States to set monetary policy and, as we noted as recently as yesterday, the whole Fed-Treasury governing accord holds that the White House should confine itself to managing the national debt.

Then again, too, when America has a central bank creating out of pixels money for the express purpose of lending it directly to the federal government, it starts to look like that accord is meaningless, which is one of the reasons we keep urging all eyes to swivel to the Congress, which holds precisely all the monetary powers the Constitution grants our government. Not that any of those sages would bring themselves to resign on principle.

What we would expect is for them to do their duty and address the problem of fiat money. The Constitution places this question entirely in Congress’ hands. The stage is now set. Chairman Bernanke was wrong. Chairwoman Yellen was wrong. Chairman Powell has been wrong, though we don’t mind confessing on their behalf that no individual can be smart enough to do what the fiat money system looks for them to do. 

Now is the time for the Republicans who hope to accede to the leadership of Congress to start moving this issue forward in the political debate. There are plenty of solons who understand this issue including, among others, Senator Scott of Florida, Senator Cruz of Texas, Congressman French Hill of Arkansas, Senator Lee of Utah, and Senator Paul of Kentucky. Let them and any who will join them take, if not the blame, the responsibility.


The New York Sun

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