The house bill H.R 5404 aims to make the US dollar redeemable in Gold.
There is a bill in Congress H.R. 5404 To define the dollar as a fixed weight of gold. For those who did not know the US dollar was at one time tied to the value of gold. In 1933 the dollar was taken off the gold standard by President Roosevelt. This was so the Government could inject mass amounts of money into the economy to get out of the Great Depression. The only fallacy to this argument is the economies of Europe and Asia had already recovered from the Great Depression without government interference. This policy gave the Federal Reserve unlimited control of the US economy.
The final nail in the coffin of the gold standard came in 1971 when President Nixon through executive order “Temporarily” removed the gold standard from the US dollar. This was to stop dollar rich foreign interests from taking the gold reserves from the US. It was also an effort to stabilize the economy along with fixed wages and prices.
There are upsides and downsides to a gold based economy. The upside is the dollar will be fixed in value. So $1 US dollar would be worth 0.00000045 ounces of gold. At this time Gold is at $1215 per ounce. This will help reign in inflation as long as new reserves of gold are produced. The people will be able to depend on the dollar for planning purposes. When the Federal Reserve a private for profit bank prints U.S. dollars it erodes the value of the dollar. Basic supply and demand. More dollars means they are worth less. Some would say they are worthless to begin with. There is nothing backing the value of the dollar today. Some would also say an upside to a gold backed currency is the U.S Government would have to live within its means. That is No debt.
These are good things from a basic economic point of view. But the downside is just as compelling. If the government was required to stay within a fixed budget with no debt; there are many programs that will have to be curtailed or abolished all together. The ever expanding welfare state will not be sustainable. The huge prison/military industrial complex would not be sustainable. All of these programs would need to be curtailed to sustainable levels. The stock market may take a drastic loss if most of the money spent on the military and welfare state were cut off. People in certain parts of the country rely heavily on the welfare state for their existence. Other parts of the country are very dependent on military spending. There is another downsize to a Gold backed economy. If the increase in the supply of gold slows or stops for any significant amount of time there will be inflation or stagnation. Without an increase in gold reserves the economy could not expand with out inflation.
Inflation is a natural result of supply and demand. If the supply of new gold slows the existing supply of gold will increase in price. With a gold backed dollar the government and the federal reserve would be powerless to regulate the economy. It would again be susceptible to the boom and bust cycles we saw for the 1st century and a half of the country. Some would contend this is good as the Free market is a self regulating system. When prices get too high the free market corrects to lower more sustainable prices. This is what happened in the 1890’s and the 1920’s prices fell and the dollar became strong again. At the end the average person had more purchasing power.
In conclusion I do not believe we will go back to a true gold standard. My reasoning is if all dollars were backed by an equivalent amount of gold it would take 2.2 billion ounces of gold to cover the $2.7 trillion dollars in circulation at the time of this article. According to Wikipedia there is currently $7.5 trillion in gold reserves world wide.
The current Gold reserves for the US as of November 2017 was $100 billion. The U.S government would need to procure 27,000 times as much gold as it has on reserve at this time. I do not see that being probable. I also believe the Federal Reserve would fight moving to a gold backed currency.