HR 5404 A bill to define the dollar as a fixed weight of gold was introduced to the Committee on Financial Services on 22nd March 2018 by congressman Alex Mooney.
“Effective 30 months after the date of enactment of this Act – (1) the secretary of the Treasury shall define the dollar in terms of a fixed weight of gold, based on that day’s closing market price of gold; and (2) Federal Reserve Banks shall make the Federal Reserve notes exchangeable with gold at the statutory gold definition for the dollar.”
That is how it must work. Mooney did not make the mistake of setting a price for gold. He correctly defined the dollar as a unit of weight.
Supposing HR5404 gets signed into law in 6 months, that would mean that the US would need to transfer to a gold standard by Spring 2021. The mere passing of this bill would send gold rocketing over the next few years and, assuming the US gold stocks are intact, it would neutralise the national debt. While there is no mention of the national debt in the bill, this is clearly a major benefit of a gold standard to the US administration. However, as the gold price rises against federal reserve notes, so does everything else, which means the public worldwide would suffer crippling inflation if they hold FRN dollars and other fiat currencies.
The price of gold would certainly skyrocket, but it is not necessarily so that national debt would be extinguished. However, it is clear that any countries that do not have gold reserves would be severely punished.
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