Nobody is exempt from the Internet. It was demonstrated once again following Representative Madison Cawthorn’s controversial remarks regarding cryptocurrency serving as the “new gold standard.”
This view was expressed in response to Fed Chair Jerome Powell’s statement that the United States will not ban cryptocurrencies. This comment brought solace to the majority of Bitcoin enthusiasts, with the representative logically believing that now was the moment to add his two cents.
To begin, the United States abandoned the gold standard under FDR in 1933. In 1971, President Richard Nixon severed all connections with it. Since 1879, the country had operated on a gold standard. It became unworkable, however, following the bank collapse of the 1930s Great Depression.
To put the Congressman’s tweet into context, adopting bitcoin in a similar fashion to the gold standard will only encourage instability and financial disruption. A ‘crypto standard’ would oblige the US and other governments to link their currencies to volatile and unregulated cryptocurrencies.
Additionally, many nations have prohibited cryptocurrency owing to its nature and volatility. Thus, the Congressman’s perspective on the same is bordering on the fictitious at the time.
Meanwhile, the USD is regarded as the ‘Reserve Currency of the World.’ If crypto’s volatility is connected to it, the US dollar’s dominance will suffer significantly, particularly given that many countries abandoned the gold standard after the USD developed and provided stability. Several accounts indicate that,
“Delegates from 44 Allied countries met in Bretton Wood, New Hampshire, in 1944 to come up with a system to manage foreign exchange that would not disadvantage any country. The delegation decided that the world’s currencies would no longer be linked to gold but could be pegged to the U.S. That’s because the greenback was, itself, linked to gold.”
While all of this has been done for the sake of establishing a stable means of value transfer, the USD has recently been tweaked. Indeed, Anthony Pompliano was among those who noted that core inflation is currently at 4.3 percent – the highest level in decades. However, the solution remains the same – Bitcoin.
Pomp noted in his blog, “With no immediate need to replace the US dollar, bitcoin is likely to continue serving as the worldwide store of value for decades to come. The idea of a transparent, programmatic monetary policy for a decentralized digital currency is far too powerful, even more so when set against the backdrop of continuous irrational monetary and fiscal policy decisions.”
Given the foregoing, it was not a wise move on the Congressman’s part to tweet it in the first place. Needless to say, many on Twitter showed the Congressman no compassion. Cawthorn may want to wait until his next tweet after being labeled “stupid” and “dumber than Ron Paul.”
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