Until President Nixon removed gold from the convertibility window in August 1971 most world currencies were pegged to reserve currencies such as Dollar sterling etc. that were backed by gold. This allowed America to print US Dollar notes without restrictions and making it just a fiat currency!
Due to various geoeconomics development across the globe and the fact that America has emerged as lead nation in economic power projection, countries started to peg their national currencies to US Dollar. Forex market began to quote exchange rates of several currencies using Dollar as the bench mark. The Dollar honeymoon lasted for a long time say precisely four decades till 2011.
On March 2011 the State of Utah approved US-minted gold coin as legal tender. Sooner other States followed suit. So far some 24 countries have passed necessary legislation to provide this facility or in the process of doing so. This is the first time internal threat to Dollar as fiat currency emerged. Yet this is just baby steps as Dollar as fiat currency is still holding sway in cash transactions.
The major blow came from Senator Alex Mooney from West Virginia who submitted a bill in the Congress in June 2023 to bring back the gold standard. Incidentally, West Virginia was one of the States that recognised gold coin issued by Federal Government as legal tender, however with a proviso that no person may compel any other person to tender or accept such gold coin
Alex Mooney is taking this effort to the next level. The process of returning to gold standard is not popular among the members of US legislature for good reasons. The limitless power to print fiat money by US administration is the liquidity that provides for the Government, Senators & business cabals to spend beyond their means. Once gold standard is back they have to walk to their sunset.
Yet the reality dawns among quite some patriotic Senators and public at large that return to gold standard is the only way to avert major crisis in the falling value of Dollars within and outside America. The pluses are overwhelming to initiate back to gold standard initiative. Few of these are summarised below:
1. Control of money supply is vested with Federal Reserve who must monitor the supply and make excess liquidity be withdrawn
2. Value of gold gets the boost initially followed by strengthening of Dollars
3. Removes the power of Treasury to over-spend or engineering value of Dollar to suit to their whims and fancies
4. Let the money market determines appreciation or depreciation of Dollar rather than US Administration fingering into market sentiments
5. The bottom line is to bring back gold to ensure the value of Dollar internationally would not be challenged by third parties.
Accordingly, Alex Mooney emerges as a pathfinder in reviving America once again as Geoeconomics power house!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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