Big Government, DOGE, and Sound Money

Many Americans hold genuine hope and optimism that Donald Trump and his Department of Government Efficiency (DOGE) appointees will succeed in their enormous task of slowing or reversing government growth.

While there's plenty of current discussion about stopping runaway government growth, little attention has been paid to ensuring it remains under control. Making sure future administrations and legislatures can’t undo or erode important reforms needs to be part of the plan.

Unfortunately, laws aren’t enough. The Founding Fathers drafted the U.S. Constitution to put strict limits on the power and size of the federal government - one imagines they would be rolling in their graves at how unfaithfully that document has been interpreted and followed.

While the American Constitution gets most of the attention, it wasn’t the only mechanism the Founders implemented to limit government. They gave the people decentralised money and purposely avoided creating a central bank. In reality, a monetary system backed by true sound money could be the most effective constraint on government growth and power.

For most of America’s history, gold and silver served as the official money. The Federal Reserve Bank was established in 1913, but the currency it issued was redeemable for gold until President Nixon put an end to that in 1971.

It’s no accident that the period between 1776 and 1913 – and, to a lesser extent, 1913 to 1971 – was one of limited government.

It is also easy to see what happens to the size of government and deficit spending when politicians throw off the shackles of sound money and embrace fiat money.

According to the Cato Institute, U.S. Federal Government spending as a percentage of overall GDP is roughly 2.5 times larger than in 1971 and 10 times what it was in 1913 when the central planners hatched their Federal Reserve scheme to establish a government-charted, privately owned banking cartel.

The chart below shows the growth in federal debt. The explosion was not possible before Nixon pulled the plug on the gold standard and the Federal Reserve replaced gold and silver-backed currency with Federal Reserve Notes.

Since the gold standard went completely out the window in 1971, the only “constraint" on federal debt has been the debt ceiling, which legislators routinely adjust higher.

The current congress will undoubtedly raise the ceiling again in a few months because the law has effectively provided no limit to the debt, but a gold standard worked great for nearly 200 years.

If the Trump administration succeeds in reining in government, restoring sound money is the best way to ensure the politicians who come next won’t screw it up. For now, as individuals, we need not wait for the government to act – we can preserve and grow our wealth with gold and silver that we can hold in our hands and continue to enjoy the benefits of sound money while the world slowly but surely catches on.