“Commodity-Backed Money. For most of U.S. history, the dollar was defined in terms of both gold and silver. The problem was that when the legal price differed from the market price, the artificially undervalued currency would disappear from circulation. There were times, for instance, when this mechanism put the U.S. on a de facto silver standard. However, as a result, inflation was limited.”
Citation: Project 2025, Section 4.4: Federal Reserve, Paul Winfree, page 769, paragraph 4
Context:
This is the second of a number of proposals Winfree suggests for limiting the power of the Federal Reserve’s role, in the absence of abolishing it entirely (in decreasing order of preference/effectiveness.)
For the pros and cons of commodity-backed money, see the analysis below.
Full contextual analysis of Section 4.4: Federal Reserve here.
Section: Section 4.4: Federal Reserve