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Robert F. Kennedy to Back U.S. Dollar With Bitcoin — How Will This Work?

Published July 19, 2023 1:13 PM
Omar Elorfaly
Published July 19, 2023 1:13 PM

Key Takeaways

  • Robert Kennedy wants to back the US Dollar with ‘hard currencies’
  • How Kennedy plans to fight off inflation with gold and Bitcoin
  • Why was the US Dollar removed from the gold standard?

Robert F. Kennedy Jr., a Democratic presidential candidate is doing the rounds for his campaign. Among his main talking points is his strong support for Bitcoin as a legible form of payment within the US.

Besides being a Bitcoin holder, Kennedy Jr. sees the cryptocurrency’s potential as a way to stabilize the value of the US dollar and counteract the rampant inflation occurring in the nation. 

During the Heal-the-Divide PAC event on July 19th, Kennedy Jr. discussed the potential for Bitcoin, alongside gold and silver, as backing for the US dollar, claiming it’s a ‘hard currency’.

Bitcoin Is The Future Of Finance, Says Kennedy Jr.

“The Kennedy administration will begin to back the US dollar with real finite assets, such as gold, silver, platinum, and Bitcoin, which is the world’s hardest liquid asset, to strengthen the US dollar and guarantee its success as a world reserve currency,” said  Kennedy Jr. during his Heal-the-Divide PAC virtual event.

The Democrat presidential candidate is an avid supporter of cryptocurrencies, specifically Bitcoin, as a viable payment and investment option in the US. RFK has reportedly invested over $250,000  in Bitcoin, which is a sign that he personally supports the crypto token movement, not just a presidential campaign gimmick.

However, RFK’s speech floated more than just the idea of stabilizing the value of the US dollar using Bitcoin and precious metals. 

“Backing dollars and U.S. debt obligations with hard assets could help restore strength back to the dollar, rein in inflation, and usher in a new era of American financial stability, peace and prosperity.”

Kennedy Jr. also talked about the idea of removing taxes when converting Bitcoin to fiat USD. The idea is to remove the financial barrier for individual investors to invest in Bitcoin and altcoins by creating a seamless financial environment without overcharging fees. On top of that, RFK is a strong supporter of creating individual crypto wallets and home-based crypto nodes that would provide Americans with freedom over their finances, eliminating the threat of governments “controlling freedom of speech using the threat of inflation”.

Is Relying On ‘Hard Currencies’ A Good Idea?

The US Dollar was removed from the gold standard back in 1971 by President Nixon as part of an economic movement now known as the Nixon Shock. Ever since, the US never fully returned to a fixed exchange rate system or a strict gold standard. The US dollar has since been a fiat currency, meaning that its value is based on trade activities and international demand. 

However, it’s important to note that there have been some subsequent efforts to reintroduce aspects of the gold standard or alternative systems with ties to gold, including the Smithsonian Agreement in 1971, and the Jamaica Agreement in 1976. 

However, all attempts made by various politicians, economists, and advocates have failed to return the fiat currency to a fixed gold standard.

It’s rather unorthodox to include Bitcoin in a list of ‘hard currencies’ that include gold and platinum as financial instruments to support the US dollar’s value. The main reason behind that is that the inflation-adjusted return  of gold annually has been about 3.3%, and the total return has been about 57%. At the same time, Bitcoin has an inflation-adjusted annualized return of nearly 145% and a total return of 33,983,965%.

Gold and other precious metals may seem like an outdated form of currency valuation, but it holds the advantage of longevity. The value of precious metals does fluctuate, but often by minute percentages, simply because it has been tried and tested for countless years. 

Bitcoin and altcoins, on the other hand, are relatively infant value deposits. Hence, these tokens tend to fluctuate in value in far larger margins.

Granted Bitcoin’s future does look to be more secure since the involvement of major financial institutions, such as BlackRock and Fidelity, who promise to “democratize crypto”, perhaps leading to a potentially more stable financial future. 

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