The Gold Standard, which Nixon junked in 1971, might come back in a new avatar: Bitcoin

According to Hans Hauge, a crypto asset investment analyst at Ikigai Fund, bitcoin and not gold, is the most suitable asset to back the oncoming rush of Central Bank Digital Currencies (CBDCs) from various countries. (CCN)

Going back in history, Nixon freed the US dollar from its linkage to gold by junking the Gold Standard. By doing this, according to Hauge, Nixon unleashed the demons of runaway inflation in the US economy. Between 1973 and 1974, inflation rose 11%.

Helicopter money

A more sinister outcome of Nixon’s action was the new-found freedom of central banks to print money at will. The gush of fiat currencies is continuing for decades, and in the US, the government is compounding the problem with its profligacy.

“Don’t blame the Fed for printing; they have no choice! We are currently running around 4% of GDP in the hole. That’s approximately 1 trillion dollars per year we have to print,” Hauge tweeted on January 25.

It is also Hauge’s view that the incessant dumping of fiat money will not cease by the creation of the CBDCs. The old systems will simply migrate to the new – digital will become the new fiat.

Ultimately, the incessant dumping of the (now digital) fiat will trigger hyperinflation, says Hauge.

When hyper-inflation strikes, bitcoin will be the savior

In the ensuing economic turmoil, stability in digital-fiat will only be achieved by backing it with bitcoin, says Hauge.

Bitcoin is the only currency that can act as a medium of exchange and a store of value at the same time; he points out.

“In conclusion, I see Bitcoin as the most likely candidate to back (at least in part) a new world of emerging digital currencies. Bitcoin is a censorship-resistant, scarce, a digitally native asset that only needs to survive while the current system crumbles around it.” Hauge tweeted.

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