Gold Standards and the Real Bills Doctrine in U.S. Monetary Policy
By Richard H. Timberlake, Jr.
This article appeared in the Winter 2007 issue of The Independent Review
Discounting the differences between the self-regulating classical gold standard that prevailed before World War I and the government-managed gold-exchange standard that replaced it, many writers have erroneously blamed the gold standard for the inability of Federal Reserve Board policymakers to implement countercyclical policies in 192933 and thus to prevent the Great Depression. Worse, they have failed to identify the true culprit in the monetary system of that erathe fallacious real bills doctrine, which guided Fed policy.