Dr. Scott Young: Confusion on What the Gold Back Standard means to the US Dollar
Dr. Scott Young: Confusion on What the Gold Back Standard means to the US Dollar
8-11-2025
The idea of a gold-backed dollar isn’t just a historical footnote; it’s a recurring topic of debate, particularly in times of economic uncertainty and inflation.
Proponents argue it’s a path to stability and fiscal discipline, while critics warn of its inflexibility in modern economies. But what exactly would a return to a gold standard entail, and how would it impact your money?
Let’s break down some of the most pressing questions surrounding a gold-backed dollar.
Currently, the U.S. dollar operates as a fiat currency. Its value is not tied to a physical commodity but is instead based on the trust and confidence in the government that issues it.
A gold-backed dollar, on the other hand, would mean that every dollar in circulation is redeemable for a fixed amount of gold. The government would hold a reserve of gold equal to the value of the currency it issues, theoretically preventing it from printing money without a tangible asset to back it.
No, you would not “lose” your money in the sense of it being confiscated or disappearing. If the U.S. were to return to a gold standard, existing dollars would likely be revalued or converted to reflect the new gold peg.
The intent behind such a move is to stabilize the currency and its purchasing power over time, not to devalue current holdings arbitrarily. However, a significant economic transition could lead to short-term market volatility or shifts in asset values.
A gold standard wouldn’t “replace” the dollar itself, but rather redefine its value and the rules governing its issuance. The dollar would still be the unit of currency, but its value would be fixed to a specific weight of gold (e.g., $X per ounce of gold). This link would impose a strict discipline on the money supply; the government could only print more dollars if it acquired more gold reserves. This fundamentally shifts the basis of the currency from government decree to a tangible commodity.
The concept of a gold standard has garnered attention from various political figures, including President Donald Trump. While he has not explicitly endorsed a full return to a classical gold standard, members of his past administration and advisors have publicly discussed its merits and the potential for integrating elements of hard asset backing into the monetary system.
This indicates an awareness and discussion of the topic within high-level political circles.
Under a classical gold standard, the Federal Reserve’s role would be drastically curtailed. The Fed’s primary function currently is to manage the nation’s money supply and influence interest rates to achieve economic stability, full employment, and moderate inflation.
With a gold standard, monetary policy would become largely automatic and non-discretionary. The supply of money would be determined by the amount of gold reserves, effectively removing the Fed’s ability to engage in quantitative easing, set interest rates freely, or stimulate the economy by printing money. Proponents see this limitation as a “fix” that prevents inflation and government overspending.
A decrease in the value or purchasing power of the dollar is, by definition, inflation. When the dollar buys less goods and services, prices for those goods and services rise. This is the core mechanism of inflation – too much money (or money that has lost value) chasing too few goods.
Historically, and under a classical gold standard, the U.S. Treasury (representing the executive branch of the government) would likely be the primary custodian of the gold reserves and responsible for issuing the currency.
The Federal Reserve’s role would be significantly diminished, potentially becoming more of a regulatory body ensuring the fixed gold-dollar exchange rate is maintained, rather than an independent central bank setting monetary policy. This would represent a considerable shift of power from the Fed back to the elected government.
A return to a gold-backed dollar is a complex proposition with profound implications for the economy, government, and individual finances. It promises stability and limits on government spending, but at the cost of monetary policy flexibility needed to navigate economic downturns.
For a deeper dive into these intricate details and further insights, watch the full video from Dr. Scott Young for further insights and information.