A digital gold standard. Trump's Candidate's Proposal to the Federal Reserve

A digital gold standard based on cryptocurrencies
Judy Shelton, the candidate proposed by Donald Trump to integrate the committee of governors of the Federal Reserve is in favor of returning to something similar to the gold standard, but using cryptocurrency technology.

The United States Federal Reserve (FED) is an independent government agency that acts as a central bank. Basically its tasks are the management of monetary policy and the regulation of the financial system. Its members are proposed by the president and approved by the Senate.

As part of its mandate, the FED deals with the regulation of interest rates and the availability of money to boost the growth of the economy and prevent the risk of inflation and recession.

What is the gold standard

The original money worked like a promissory note. Basically one could go to the issuer and exchange it for the amount of valuable minerals that appeared on each bill. Gold was used in most countries. This system ensured that each banknote had a solid backing.

Now, the rulers were never able to adjust to a budget so they usually resort to two mechanisms; or go into debt or issue money. In the first case, you have to use the reserve of value to pay. In the second, there ends up having more bills circulating than available support.

One way or another lThe national currency ends up devaluing and inflation increases.

At the end of the Second World War it was decided to adopt the US dollar as the reference currency for world trade. It was a good decision as the dollar was still backed by the gold standard. However, the country abandoned it in 1971.

With US international leadership under discussion, countries such as Russia, China, Iran or Venezuela are looking for other alternatives to the dollar for international transactions. Should other nations join in, this could have disastrous consequences for the US economy. What Shelton proposes is to restore confidence to the dollar by reducing the margin of the North American government to do what occurs to it.

As stated

I think what the gold standard represents is monetary discipline itself. Money is supposed to be a unit of account, a reliable measure, and a reliable store of value. It should not be subject to who the chairman of the Federal Reserve is.

According to Shelton, an adaptation of the gold standard method can be done using cryptocurrency technology. It is not the first time that she has championed the use of a digital dollar as a way to help preserve the primacy of the US currency around the world.

A digital gold standard. What can cryptocurrencies contribute?

A cryptocurrency is a digital asset that functions as a medium of exchange wherein individual records of coin ownership are stored in a decentralized, computerized database using uStrong cryptography to secure transaction records, control the creation of additional digital currency records and verify the transfer of ownership of the currency.

Their characteristics are:

  • The system does not have a central authority, its management is distributed throughout the network.
  • The system defines whether new cryptocurrency units can be created, defining the form of their creation and the assignment of ownership.
  • Ownership of cryptocurrencies can be demonstrated exclusively by cryptographic means.
  • The system allows transactions in which the ownership of cryptographic units is changed.
  • Validation of each transaction can only be issued by an entity that proves current ownership of those units.

The candidate considers that This system is better than the current one in which a dozen people who meet eight times a year make decisions that affect the functioning of the entire economy

As he says

If the success of capitalism depends on someone being smart enough to know what to do, we are doomed.

Agreeing with cryptocurrency advocates, Shelton thinks that Cryptocurrencies are a way for national currencies to be immune to any government's attempts to "manipulate" their value.

The bad news is that Judy's mindset is too much for traditional Democratic and Republican politicians. His nomination is still delayed.

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  1.   ja said

    Precisely, Ronald Reagan eliminated the gold standard, officially to allow agility and versatility in economic operations, unofficially, so as not to have to justify any endorsement by any employer, the FED and the federal reserve print banknotes, like those of monopoly, without no one to really control them.
    To move to a controlled and transparent system, are we crazy or what, what will these Bolivarian chavistas ask for next?

    1.    Diego German Gonzalez said

      Thanks for your comment.
      My understanding was that it was Nixon who abandoned him.

      1.    Miguel Angel Rodriguez Sumoza said

        And you understand well, what perhaps the comrade refers to (who seems to me to be my fellow countryman: v) is that in 1984 there was a proposal from a Republican candidate during the Reagan government who proposed to return (very fucking seriously) to the boss gold (thus resurrecting the Bretton Woods agreements, which is the fundamental pillar to understand why the dollar [paper money] was normalized as an international exchange currency after World War II), but the Gringoland Congress rejected the idea ( because we go, the political class regardless of the conditions always works under their interests).

        Still, the pre-World War II gold standard was much healthier than the post-World War II gold standard because gold reserves and monetary policy were exclusively run by the US government, so if they… "muddied it," the world would go to an economic cliff, with the fiat pattern of today completely fiduciary and centralized, the same can happen (and it can even be worse)

        And I make a note here about it, the Persian fiduciary pattern is not bad, all the cryptocurrencies that are mostly used are in themselves fiduciary (since they do not depend on an exchange value good for their issuance), the difference is that the value a fiat currency fluctuates with supply and demand; but very different is the fiat pattern (which is basically what really exists), which is money generated by decree, that is, unlike currencies such as cryptos that depend on their supply and demand to be mined, saved and exchanged , fiat money is the product of the Decree and regulations of an entity that imposes it by force.

        This article better details the time in 1984 when the US was able to return to the gold standard. https://oroinformacion.com/eeuu-estuvo-a-punto-de-volver-al-patron-oro-en-1984/

        1.    Diego German Gonzalez said

          Your contribution is very interesting. Thanks