ARE WE REALLY BACK TO A “GOLD STANDARD”!?

The committee which is drafting the platform for US Republican National Convention has announced that they are including a proposal to return to the gold standard. Big news..
Ironic given that it was a Republican president – Richard Nixon – who abolished the gold standard in the 1970s. Regardless, it’s nice to see the issue thrust into the spotlight. But does it stand a chance of actually becoming a reality?
A gold standard is a monetary system in which individual currency units are fixed to an amount of gold held by the government; under a gold standard, the paper money supply cannot be expanded without also increasing the amount of gold on hand..
With a full gold standard, 100% of the money supply is backed by gold. In practice, a smaller amount of gold may be fixed to back the money supply..
According to the World Gold Council, all the gold that has ever been mined in the world is now valued at roughly $10 trillion. This is essentially the same number as the current M2 money supply in the United States..
In other words, to fully back its existing money supply, the US government would have to control every ounce of gold that has ever been mined in the history of the world..
At present, the market value of the federal government’s gold holdings supposedly only amounts to about $250 billion..
Anyhow, this $250 billion worth of gold bullion constitutes a mere 2.5% of US money supply. So advocating a return to the gold standard is much easier said than done..
Even under a flimsy, partial gold standard, the amount of gold backing the currency would certainly need to be north of 2.5%. Even if just 10%, this would suggest either:
1/ money supply would contract by 75%, spurring massive deflation..
2/ the gold price increases to $5,000..
Clearly one of the key risks in this scenario is that the US government would need to acquire as much gold as they can get their hands on, likely through Roosewellian-style gold confiscation..
This talk of a return to the gold standard is probably just a pipe dream. The numbers don’t make sense. Besides, why would any politician want to be constrained from conjuring money out of thin air??