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Congressman Introduces Bill To Define the Dollar as a Fixed Weight Of Gold

Gold News
A Call for a Return to a Classical Gold Standard.

Late last month, U.S. Representative for West Virginia’s 2nd Congressional District, Alexander Xavier Mooney
introduced H. R. 5404 to define the dollar as a fixed weight of gold. The bill was referred to the Committee on Financial Services. (COFS) The COFS is constituted of sixty members. Jeb Hensarling of Texas is the Chairman of the COFS and Maxine Waters of California is its ranking member.

Featured prominently of the COFS website is a running debt meter showing the U.S. debt as at April 19, 2018, $21,085,445,357,361 (or over $21 trillion). While Congress is aware of the growing debt, no measures have been taken to reduce it.

H.R. 5404 is designed to institute some financial discipline on Congress and the Federal Reserves. It is not expected that H. R. 5404 will be passed any time soon, however, the bill presents important findings and establishes a marker for the bill or a similar one to be passed in the event of a financial crisis. The bill also provides evidence that the Federal Reserve’s inflationary policies are harmful to U.S. citizens and manufacturers.

The text of HR 5404 notes that Congress has found that:

(1) The United States dollar has lost 30 percent of its purchasing power since 2000, and 96 percent of its purchasing power since the end of the gold standard in 1913.

(2) Under the Federal Reserve’s 2 percent inflation objective, the dollar loses half of its purchasing power every generation, or 35 years.

(3) American families need long-term price stability to meet their household spending needs, save money, and plan for retirement.

(4) The Federal Reserve policy of long-term inflation has made American manufacturing uncompetitive, raising the cost of United States manufactured goods by more than 40 percent since 2000, compared to less than 20 percent in Germany and France.

(5) Between 2000 and 2010, United States manufacturing employment shrunk by one-third after holding steady for 30 years at nearly 20,000,000 jobs.

(6) The American economy needs a stable dollar, fixed exchange rates, and money supply controlled by the market not the government.

(7) The gold standard puts control of the money supply with the market instead of the Federal Reserve.

(8) The gold standard means legal tender defined by and convertible into a certain quantity of gold.

(9) Under the gold standard through 1913 the United States economy grew at an annual average of four percent, one-third larger than the growth rate since then and twice the level since 2000.

(10) The international gold exchange standard from 1914 to 1971 did not provide for a United States dollar convertible into gold, and therefore helped cause the Great Depression and stagflation.

(11) The Federal Reserve’s trickle down policy of expanding the money supply with no demand for it has enriched the owners of financial assets but endangered the jobs, wages, and savings of blue collar workers.

(12) Restoring American middle-class prosperity requires change in monetary policy authorized to Congress in Article I, Section 8, Clause 5 of the Constitution.

The bill’s findings provide the basis for re-instituting a classical gold standard in order to create a non-inflationary, market driven economy that would benefit American citizens and the economy. Subsection 12 of Sec 1 of H R 5404 that notes that changes in monetary policy authorized to Congress in Article I, Section 8, Clause 5 of the Constitution are necessary to restore American middle class prosperity. This is a veiled call to end the Fed’s control over monetary policy and to return it to the Congress.

Article I, Section 8, Clause 5 gives Congress the power:

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures. In 1913, however Congress created the Federal Reserve System under the “necessary and proper” clause of Section 8 The Federal Reserve is now empowered to regulate U.S. monetary policy and to issue Federal Reserve notes.

HR 5404 would allow Congress to recapture the power to coin money and conduct a non inflationary monetary policy.

SEC. 2. of HR 5404 reads


Effective 30 months after the date of enactment of this Act—

(1) the Secretary of the Treasury (in this Act referred to as the “Secretary”) 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 Federal Reserve notes exchangeable with gold at the statutory gold definition of the dollar.

While the Federal Reserve would still have the power to issue Federal Reserve notes under HR 5404, those FRNs would be exchangeable at the statutory gold definition of the dollar based on a fixed weight of gold based on the market’s daily closing price.

HR 5404 would also require the U.S. government to disclose all of its holdings of gold, which most likely would involve a full audit of its gold held at Fort Knox, West Point, New York and other locations.

HR 5404 Section 3 reads


During the 30-month period following the date of enactment of this Act, the United States Government shall take timely and reasonable steps to disclose all of its holdings of gold, together with a contemporaneous report of any United States governmental purchases or sales, thus enhancing the ability of the market and of market participants to arrive at the fixed dollar-gold parity in an orderly fashion.

Congressman Alexander Xavier Mooney’s bill follows legislation passed by more than twelve states in recent years that removes state capital gains taxes on gold and silver and allows residents to use precious metals as currency. States enacting these laws are simply recognizing another principle enumerated in Article 1 Section, that “No State shall… make any Thing but gold and silver Coin a Tender in Payment in Debt.”

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This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.