Putting the dollar back on the gold standard.
Hi Terry,
After reading your “Ode to Gold” column, I wanted to ask if you think the dollar should go back on the gold standard? President Nixon took it off the gold standard in 1971. Should we go back to it to tamp down inflation?
Terry Says
The dollar is unofficially backed by gold. But it isn’t CONVERTIBLE into gold! That happened because DeGaulle threatened to demand an exchange of dollars held by the French central bank for gold bullion. Nixon slammed the gold window shut!
Given the volume of U.S. debt out there, if the dollar were to be backed by gold and convertible into gold, the price would have to be set incredibly high. And other countries would also have to have their currencies linked to gold –or you can be sure they would once again demand to convert the trillions of dollars in Treasury IOUS they hold into gold.
This is a very sophisticated concept. Here’s a wonderful article that examines the ramifications of a return to the Gold Standard, which would be the end of the Federal Reserve system.
Take the time to read this: https://investingnews.com/daily/resource-investing/precious-metals-investing/gold-investing/trump-gold-standard/
Then please write back and let me know what you think!
