Bitcoin

The Upcoming US “Gold Standard Restoration Act” & Bitcoin

04/10/2023
Bitcoin Ethereum News
  • Three US Congressmen have presented the US “Gold Standard Restoration Act,” restructuring the USD pegging system. 
  • USD is supposed to be pegged with Gold. 

Reviving the US Dollar from its worst position in 80 years, the Gold Standard Bill was introduced. Can it help Bitcoin? Three Congressmen, Andy Biggs, Alex Mooney and Paul Gosar, introduced a bill on April 4, 2023, introducing the “Golden Standard Restoration Act,” (H.R. 2435) which proposes that the USD be pegged with a fixed weight of gold.  

The “Gold Standard Restoration Act” – Explained

The official document noted that the US Dollar had lost its purchasing capacity by almost 40% since 2000 and around 97% since the Federal Reserve Act was introduced in 1913. The bill aims to effectuate the convertibility of the greenback with a fixed amount of Gold. This scenario would allow the US gold reserve and US Treasury to support the Federal Reserve banks as guarantors. 

If the bill is passed, then 24 months will be given to the Federal Reserve and US Treasury to disclose all gold holdings and transactions, publicly. The USD would be officially re-pegged with a fixed weight of gold at its current market price. 

This monetary system places a standard economic unit on the same pedestal as a fixed quantity of gold. It was in fact, the international monetary system from the 1870s to the 1920s till 1932, when the Nixon administration discontinued the practice.

With this bill, the lawmakers of the United States are trying to recreate the Gold standard era. Moreover, if the results are good, many countries could adopt the mechanism. 

The global economy is struggling amid geopolitical tensions and rising climate-resource-constraints. Inflation has hit the roof in several countries since th COVID-19. The land of the free tried to cross swords with the situation by printing more cash, thereby considerably reducing USDs purchasing power.

Likely Impact on Bitcoin

The recent status of the US economy has made former President Donald Trump state that the US fiat currency could lose its status as the world’s reserve currency. The statement drew a lot of unwanted attention worldwide. However, many think this “Gold Standard Restoration Act” is a better system than the current one.

Bitcoin is expected to gain from this switch. Primarily, the bill would prevent irresponsible spending, and the government would not be able to print the money out of thin air.

If the bill goes further, economies would govern prices and not the bureaucrats, and the American families, businesses, and the US economy would not have to rely solely on the mercy of the Federal Reserve. The much-required stability would be in the system if the bill could deliver what is promised. 

Microstrategy’s Michael Saylor said that although this system appears to be a solution for now, he argues that Bitcoin, with its technological advancement and inherent features, could also serve as the world’s reserve currency. 

For now, the Gold standard is not impacting the Bitcoin price positively, but it sure has the potential to fuel the rally in a long-term scenario. 

Latest posts by Andrew Smith (see all)

Source: https://www.thecoinrepublic.com/2023/04/09/the-upcoming-us-gold-standard-restoration-act-bitcoin/