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What did FDR mean by “the only thing we have to fear is fear itself?”
On March 4, 1933, FDR delivered his inaugural address. In it, he used the phrase “the only thing we have to fear is fear itself”. I did a little searching and this phrase is used a LOT in Christian books. So often. But it almost always refers to the fear one person has in their heart. In reality, it is a comment on collective fear. The Great Depression started in 1929 and was exacerbated by a bank run in which Americans lost faith in the value of our currency and the banking systems.
Do we believe in God’s economy?
That is an important distinction. FDR’s speech is about collective fear. As I’ve contemplated the modernist/fundamentalist debate this season, I keep returning to the idea of fear, not in the US economy but in God’s economy. He commands us to love the Lord, keep His commands, love our neighbors, turn the other cheek, and give to those who ask of us. Why do we forget to do this important work? Could it be because we’ve lost faith in God’s economy?
This episode features a clip from my discussion with Jacob Goldstein, former host of NPR’s Planet Money podcast and the current host of Pushkin’s What’s Your Problem? podcast. His book is Money: The True Story of a Made-up Thing.
- Why does it matter that FDR’s quote “…the only thing we have to fear is fear itself” is a collective statement and not one about individual fear?
- What are some identifying features of God’s economy?
- Do you trust in the way that God tells us to do things?
- When was the last time you prayed for someone who you don’t like?
- Do you believe in turning the other cheek?
How the gold standard made the Great Depression much worse
The Great Depression. Some say that it was caused by a failure of the stock market. Well… that’s not all. Jacob Goldstein, host of NPR’s Planet Money podcast and author of “Money: the Truce Story of a Made-Up Thing” joins us to discuss the role the gold standard played in making the depression what it was.
A run on the bank
Here is why the gold standard made the Great Depression much worse. Simply put, the panic of 1929 caused people to run to the bank and demand their money back in the form of gold. We were on the gold standard back then and you could literally go to a bank and ask for them to get your money in gold. But banks were running out! There was only so much gold on hand because banks don’t generally keep 100% of their money in the vault. And banks (for the ease of our understanding things) “create” money when they do loans. So it was possible for a bank only to have a certain percentage of their loans backed by actual gold.
The Federal Reserve Raised Interest Rates
This created real trouble. If the banks ran out of gold, they’d go broke and have to close. So the Federal Reserve decided to raise interest rates. Raising interest rates gives people an incentive to leave their money in banks because then they get more interest. BUT it also made it harder for people to borrow money or refinance their existing loans. Which put a huge crimp on the American financial system. In order to keep gold in the banks, the Fed had to hobble the loan industry. That meant that businesses couldn’t get loans to help with payroll, and people looking to start a business couldn’t get the money they needed. And the economy froze.
That is why the gold standard was bad for the economy. Preserving it meant sacrificing the loan industry.
What is the Gold Standard?
There was a time not so long ago when the value of an ounce of gold cost $20.67. That was true not just in one moment or one year. It was true in the 1880s, 1890s, 1900s, 1920s… This was the gold standard. A person could take $20.67 to a federal bank and receive an ounce of gold in return.
This system worked really well… for a while. But by the 1890s the constant deflation caused by the increasing value of gold meant that people with loans had to work harder and harder to pay them back. The value of gold and the value of goods had an inverse relationship, like a seesaw. One side went up and the other went down.
William Jennings Bryan and “The Cross of Gold” speech
This is the topic William Jennings Bryan chose to discuss in the 1896 Democratic Convention. And it was that speech that won him the presidential nomination that year. Imagine that! Someone so passionate about inflating the cost of good that they are chosen to be president! His bimetallism (he wanted to add silver into the mix to devalue the specie) stance came out of his social gospel leanings and his Christian faith. This was a high point for the social gospel. As the evangelical world was about to turn to the darker premillennialist view, Bryan made an impassioned plea that we could, in fact, make this world a better place.
My guest for this episode is the amazing Jacob Goldstein. He’s the author of the book “Money: the True Story of a Made-Up Thing”. He’s also a co-host of the Planet Money Podcast. You’ll also hear from Michael Kazin, professor of history from Georgetown and author of “A Godly Hero”.
- Have you ever gotten so excited at a political speech that you would gladly carry the politician around the room?
- What is money?
- Why do some of us want our money to be backed by something else? Why gold?
- Is there something inherent in gold that you think makes it forever valuable?
- Do politicians and government officials have some responsibility to consider how monetary policy impacts those in the lower classes? What does that look like?
- How has your life been impacted by monetary policy?
- How do you feel about things like the FDIC?