Is Robert Jr.'s idea of backing the dollar with bitcoin under fire?

Author: JAMES BICKERTON, Newsweek; Compiler: Songxue, Jinse Finance

**Robert F. Kennedy Jr.'s proposal to back the U.S. dollar with bitcoin has come under fire from cryptocurrency experts, with one economist calling the plan a "nearly impossible feat" that would Limit the Fed's ability to respond to economic crises. **

Earlier this month, Kennedy claimed during a speech at an event hosted by the Bridging the Divide Super PAC with ties to prominent Republican figures supporting Donald Trump that the use of Bitcoin included Bitcoin. Backing the U.S. dollar with hard assets, including U.S. dollars, will "rein in inflation and usher in a new era of financial stability, peace, and prosperity in the United States." **

Kennedy is currently running for the 2024 Democratic presidential nomination, even though polls show him trailing significantly behind President Joe Biden, who is seeking re-election to the White House. Kennedy, an environmental activist turned vaccine skeptic, is using his campaign to challenge what he sees as an ongoing assault on free speech and to oppose the Biden administration's military aid to Ukraine.

Speaking of bridging the divide, Kennedy said: "My plan is to start very, very small, maybe 1% of the national debt issued will be backed by hard currency, gold, silver or bitcoin."

Robert Kennedy Jr. testifies at a hearing in Washington, DC on July 20, 2023. Kennedy’s proposal to back the dollar with bitcoin would limit the Fed’s ability to respond to the financial crisis.

Treasury bills are short-term government debt sold by the Treasury Department to support state spending.

**Kennedy also vowed to "exempt capital gains tax on bitcoin exchange for dollars," arguing that it would create more jobs in the U.S. and safeguard free speech. **

"Non-taxable events are not reportable, which means it will be harder for governments to weaponize currency against free speech, which, as many of you know, is one of my main goals," he said.

Jean-Paul Lam, a cryptocurrency expert and associate professor at the University of Waterloo in Canada, has slammed a policy he calls an "essential return to the gold standard."

Lam noted: “Considering all the issues associated with bitcoin, such as price volatility, security, and limited flexibility, making bitcoin a monetary backer for any national currency is an almost impossible feat.”

“However, the major and possibly fatal drawback of the gold-bitcoin standard is that it would severely limit the ability of the Federal Reserve to respond to recessions and provide the necessary monetary stimulus during crises. For example, imagine that under the gold standard, How the Fed would have responded during the 2008-2009 financial crisis or the COVID-19 pandemic (it will not have prevented economic catastrophe).

"The downsides of the gold standard far outweigh any benefits we might gain from it. The issue has been well debated and resolved. It doesn't merit further discussion," Lam said.

Concerns were also raised by Billy Bambrough, a senior Forbes contributor who specializes in cryptocurrencies, arguing that Kennedy's plan would create "a level of uncertainty that the market is struggling to deal with."

Bamblow said: "As the UK has recently seen, short-lived Prime Minister Liz Truss seeks to go against the economic status quo,** unorthodox or unconventional economic policies can destabilize markets and make these positions unsustainable .”**

Bambro noted that Kennedy’s campaign “included for the first time the right to create, buy, sell and hold digital assets like Bitcoin on the [presidential] ballot.”

In a speech at the Bitcoin 2023 conference in May, Kennedy described Bitcoin as the "exercise and guarantee" of civil liberties. "As President, I will ensure that your right to own and use Bitcoin is not violated," he said.