Republican Representative Ted Poe introduced a bill on July 31 of this year that would, he hoped, stop the devaluation of the USD.

On Wednesday he described it for a bigger public.

‘The U.S. dollar affects every American citizen and every American business. Our economy is totally dependent upon the dollar. To have a stable economy, we must have a stable dollar,’ he wrote.

But how to stabilize the dollar? Much has been tried in history, not always to the benefit of the American people.

The current Congress seems unwilling to do anything lasting about the problem of the devaluation of the American valuta. Other congresses preceeding it in recent years were not very active on this front either; the USD has not been stable for quite some time, Poe recalled.

Additionally, simplistic, half-hearted solutions will not work. No, America needs to do something radical. Poe’s solution: do not let the amount of money in the economy ‘be limited by anything physical. It should be determined by the demand for money, which depends upon the transactions people want to do and how much money they want to hold.’

After all, Poe argued, ‘[w]hat matters about money is not its quantity but its value. In this, dollars are no different than foot rulers. No one cares how many foot rulers there are in the world. What matters is that each one is the length prescribed by the U.S. Bureau of Standards.’

His bill ‘directs the Federal Reserve to bring the price of gold down to $500/oz and then to keep it there. The Fed would do this by announcing that its Open Market Desk was prepared to sell government bonds and contract the monetary base until the price of gold falls to $500/oz.’

Coupling the dollar on gold would, Poe argued, cause the monetary base to ‘expand and contract automatically in response to market demand…’ As long as the Fed is willing to ‘sell as much as $45 billion worth of bonds to implement the new policy.’

As to the question ‘why gold,’ Poe answered that ‘the financial markets want, and the American people deserve, a dollar that is “as good as gold”.’ As for the $500/oz. number the Congressman explains: ‘the current market price of gold reflects the expectation (and fear) of future inflation. I believe that fixing the value of the dollar now in terms of gold at $500/oz will stop the current inflation without causing deflation. However, my bill also provides a powerful supply-side stimulus, in the form of first-year expensing of all capital investment, to ensure that economic growth accelerates at the same time that inflation is being stopped.’

The results will be felt by all Americans: the price of one gallon gasoline will fall from $3,50 to $2,50 instantly. ‘It will strengthen the dollar against foreign currencies. Most important, it will prevent Americans’ incomes and savings from being stolen by inflation,’ he explained.

His bill will ‘not put America on the gold standard,’ he wrote, but simply ‘always be worth the same as one five-hundredth of an ounce of gold.’ It would ‘be the same “legal tender” currency that we have now,’ Poe claimed, but then more stable.

Representative Poe, a former judge, is a member of Congress serving the 2nd district of Texas.