How does someone exchange their dollars for this basket?
You would buy shares of the associated index fund. Those shares would be the new ‘cash’
Of course, having a stockpile of any of the elements of that basket would also be a good idea as it would protect the buying power of your... wealth
For politicians, the problem with having a currency “pegged” to gold, or any other commodities, is that what it really means is that you are no longer allowed to just print money. It puts a limit on what government can spend.
Politicians don’t like that.