A gold standard could be the answer to US currency woes, but it may mean much higher crypto prices.
US Congress Rep Calls To Reinstate Gold Standard
Georgia Congress Representative Marjorie Taylor Greene, or MTG, has recently made headlines with her call for the US to return to the gold standard.
Her bold statement was prompted by the news that the Federal Reserve plans to launch a digital payment system in July – the Fednow. Fednow is expected to facilitate the movement of money, bill payments, and transfers. It will also reduce transaction costs for consumers.
MTG disapproved of the Fed’s digital currency payment system, arguing that the US should not abandon the gold standard.
The Congresswoman’s remarks come when many countries shift away from the gold standard to embrace digital currencies.
US Has Been Off Gold Since 1971
MTG’s statement comes amid concerns about the global reliance on the US dollar and criticism of Operation Choke Point 2.0, which is aimed at curbing the use of cryptocurrencies in the US.
However, the launch of the Fed’s digital payment system clearly indicates that the US is moving towards digitizing currency.
The US adopted the gold standard in 1900, and it remained in place until 1971, when President Nixon announced that the US would abandon the gold standard. This move effectively ended the gold standard for the US and marked a significant shift in the global monetary system.
Since then, the US dollar has been a fiat currency, meaning any physical commodity does not back it.
The dollar’s value is determined by market forces, such as supply and demand, and is influenced by factors such as inflation, interest rates, and government policies.
The Dollar Looks Rough
The US dollar’s dominance is under a “gang attack.” There have been several moves by global countries to move away from the US dollar. Some of the most significant actions are from Russia and China.
Russia has been pushing to remove the dollar’s hold over its economy and financial markets to ease the impact of sanctions from the US and its allies. On the other hand, China has long been attempting to strengthen the power of its currency – the yuan.
China’s CBDC pilot – digital yuan – is also in the testing phase. China’s yuan is now accepted in Russia. Brazil also adopted yuan payments as an agreement was reached with China’s central bank in February. It could be another blow to the significant role of the US dollar.
Some experts believe that the yuan could become one of the global reserve currencies in the world. A think tank also suggests that countries may want to diversify away from the US dollar due to recent actions taken by the US, such as freezing Russia’s central bank reserves and disconnecting Russia from the interbank messaging.
In addition to those countries, Saudi Arabia, Iran, and others are moving away from pricing and trading energy in US dollars.
A Bitcoin Standard?
Taylor Greene’s proposal has sparked a debate among economists and lawmakers, with some arguing that the gold standard would provide a more reliable benchmark for the value of the US dollar.
In contrast, others believe it could be a little too late now, given the current state of the US economy and its role as a global economic powerhouse.
Some suggest the adoption of the Bitcoin standard for the US dollar. Proponents of this idea argue that Bitcoin, as a decentralized digital currency, has many advantages over the current system of fiat currency that is subject to manipulation by governments and financial institutions.
Yet the volatility of Bitcoin remains a concern.
Bitcoin’s volatile nature makes it challenging to use as a stable currency for everyday transactions. Adopting a Bitcoin standard would require significant technical expertise and infrastructure, which could challenge the US government and financial institutions.