In-Depth: Sponsoring Rep. Alex Mooney (R-WV) introduced this bill to put the U.S. back on a gold standard, writing in the Wall Street Journal:

“The current Federal Reserve system benefits elites. The gold standard is equitable and puts “we the people” in control of the money supply. That’s why it was part of America’s founding and has been a key to the country’s long economic success… I introduced a bill that would return the dollar to the gold standard — the first such attempt since Jack Kemp’s Gold Standard Act of 1984. Under this legislation the Fed would still exist, but it would administer the money supply rather than dictate it. Instead the market would be in charge, the supply and demand for money would match up, and prices would be shaped by economics rather than the instincts of bureaucrats.”

The Deputy Director of Research at the St. Louis Federal Reserve David Wheelock argues that tying currency to the gold supply doesn’t guarantee financial stability because the supply of gold isn’t fixed, and noted that the U.S. isn’t a major supplier of gold which would place it at a disadvantage:

“The U.S. mines a lot of gold, but we’re not the biggest producer. The bigger suppliers of gold would have more control over our monetary policy, and there’s no reason to have it because we can get the advantages of the gold standard and avoid the disadvantages without being on a gold standard.”

Of Note: The value of the U.S. dollar was based on a bimetallic system involving silver and gold from its founding until about 1850 when gold became the principal form of currency. The gold standard was briefly abandoned during the Civil War, before a “classic” gold standard was adopted in 1879 which made dollars fully convertible with gold. The Federal Reserve was created in 1913 to maintain the gold standard and issued debt backed by gold. Four years after the start of the Great Depression the U.S. went off the gold standard and the federal government nationalized gold reserves.

In 1944 the U.S. went back onto a quasi-gold standard under the Bretton Woods system, in which central banks could exchange dollars for gold while Americans were prohibited from owning gold. In 1971 the U.S. announced that it would no longer convert dollars to fold, meaning that the monetary system used fiat money, although private gold ownership was legalized once again in 1974.

Media:

• Sponsoring Rep. Alex Mooney (R-WV) Wall Street Journal Op-Ed
  
• Forbes
  
• Zerohedge
  
• American Thinker (Op-Ed In Favor)
  
• Business Insider (Context)
  
• St. Louis Fed (Context)