The dollar is the only stable reserve currency---MMT makes it less valuable and continues to surge debt levels.
Frank Holmes 21, American businessman and investor, Executive Chairman of Hive Blockchain Technologies and CEO and Chief Investment Officer at U.S. Global Investors, 01/24/21, “Closing the gold window opened the door to Modern Monetary Theory (MMT),” https://www.mining.com/closing-the-gold-window-opened-the-door-to-modern-monetary-theory-mmt/, ghs—gc
The drawback is that, in the years since the end of the gold standard, there’s been a significant and growing lack of discipline when it comes to government spending. Before 1971, there was a natural limit to how much money could be printed. New issuances were dependent on the amount of gold sitting in the nation’s coffers.
Today, with the dollar backed not by a hard asset but by the “full faith and credit” of the U.S. government, the federal debt is closing in on an astronomical $28 trillion, which is more than 130% of the size of the U.S. economy.
To give you some idea of how dramatically times have changed, federal debt in 1960 was only a little over half the size of the economy.
The debt is expected to surge even more in the coming months, now that Joe Biden has been sworn in as president and Congressional control has shifted in the Democrats’ favor. Biden, who turned 78 in November, has called for a $1.9 trillion economic relief package that includes $1,400 checks for all American adults.
I’m not advocating that we return to the gold standard. It’s probably no longer feasible. According to the Treasury Department, official gold reserves currently stand at approximately 261 million ounces, for a market value of some $493 billion.
That’s just not enough metal to support an economy as large as the U.S.—not unless the price of each ounce of gold was fixed at something outrageous like $100,000.
There’s been some discussion of making Bitcoin a reserve currency. Like gold, its supply is limited, and it has the potential to scale up. But at the moment, cryptos are far too volatile. Both Bitcoin and Ethereum corrected substantially on Thursday (the first 21st day of the 21st year of the 21st century), with the former falling 13%, the latter close to 19%.
So for now, we’re left with the current monetary system of unlimited money-printing, which in turn makes each U.S. dollar less valuable and each ounce of gold more valuable.