It augurs well for Elon Musk’s cost-cutting instinct to see that the mogul is zeroing in on one of the most bloated payrolls in the entire government contraption — the Federal Reserve System. “The Fed is absurdly overstaffed,” is how Mr. Musk puts it on his X platform. Bloomberg News reports that the Fed has some 24,000 people on staff. Paul Volcker, now gone, alas, expressed to us a sense of incredulity at the hundreds of economists employed by the Fed.

Our own view is that the explosion of staff at the Fed is a symptom of fiat money. For a gold standard — to which America to varying degrees adhered from its founding until 1971 — is a remarkably efficient way of directing monetary policy. The dollar is defined in law as a weight of  gold, and dollars are convertible at that fixed rate in exchange for the monetary metal. The discipline of convertibility requires governments — and central banks — to run a tight ship.

“A proper gold standard was a well-oiled machine,” monetary sage James Grant has said, as the free movement of gold across borders “checked what are politely known today as ‘imbalances.’” Nations running deficits had to cover their obligations in gold. That outflow of gold would require adjustments — like, say, higher interest rates — until balance returned. “At length, the deficit country would be restored to something like competitive trim,” Mr. Grant says.

One advantage of the system sketched by Mr. Grant is that it operates, to a large degree, autonomously. The global free market, with gold as the historic yardstick, does the work of determining the value of goods and services — and currencies. Yet with the severing, by President Nixon, of the last tie between the dollar and gold, America moved away from a gold standard and toward what Mr. Grant describes as its “exact opposite” — a so-called PhD Standard.

This PhD Standard is, per Mr. Grant’s definition, “the system of discretionary manipulation of interest rates by doctors of economics to achieve a little inflation — not too much, mind you — and maximum employment.” Instead of a dollar convertible into gold at a fixed rate, the PhD Standard is built on fiat dollars, the irredeemable electronic paper ticket money that is legal tender not because of any intrinsic value, but because of government diktat.

It’s testament to the complexity of this system that the Federal Reserve requires on its staff the services of more than 400 PhDs in economics to conduct the monetary manipulations that, in the absence of a definition in gold, prop up the fiat dollar. Feature, say the trillions of dollars in assets racked up under the guise of Quantitative Easing. The money for these purchases came from dollars created out of thin air, from a few taps on a keyboard.

In pre-fiat money days, a PhD wasn’t quite the coin of the realm that it was to become. In 2014, Justin Fox reported in Harvard Business Review that the Fed had become America’s  largest employer of PhDs in economics, noting that the degree had “basically become a prerequisite for running the Fed.” Mr. Fox marveled that in 1949 but one such PhD was on the Fed’s Open Market Committee, which sets interest rate policy.

By 1964, the number of economics PhDs had jumped to three, Mr. Fox adds, and then, by 1979, there were five. Today, of the 12 members of the committee, six hold economics PhDs, according to their biographies on the Fed’s website. The downside to this trend, as Mr. Fox pointed out, is that “graduate education in economics, especially in macroeconomics, comes under pretty regular criticism for being narrow and unrealistic.”

Was that a factor in, say, the Fed’s failure to prevent the wave of inflation — a 20 percent jump in prices — that gripped America under President Biden? Or, say the Fed’s operating losses exceeding its own stated capital, rendering the central bank, at least in theory, insolvent? It suggests that if President Trump and Mr. Musk are looking to trim staff at the Fed, the roster of PhDs is one place to start. Then it could turn to the restoration of honest money.