The US gold reserves may one day pay off our national debt
HalfDime
Posts: 65 ✭✭✭
So everyone knows how much debt the United States has ($35.6 Trillion dollars), and it increases daily on all of us through government spending. We also have about 261 million troy ounces of gold in our official gold reserves.
The price of gold is now $2711 an ounce and continues to go higher as our debt increases. So what happens when the US can't pay the bills anymore and can't raise any more debt? Some I am sure will remember the peso devaluation that occurred in Mexico. Anyone who visited Mexico during that period saw the average Mexican wanting to be paid in US dollars, since the peso was crashing at the time. The Mexican government ended up minting peso coins that had denominations of up to 5,000 pesos in 1988 by the time the dust had cleared.
In 1993, three zeros were stripped from the value of the peso, and they issued new coins. So the 5,000 peso coin was exchanged for 5 peso coins. At best, it is likely something similar happens in the US, although probably not to this magnitude.
The alternative is to use the gold reserves to pay off our national debt. So if it happened today, we would see each ounce of gold pay off $136,302 dollars of debt (This is 35.6 trillion debt divided by 261 million troy ounces). That is what I would call the floor to the price of gold in an emergency.
$136,302 per ounce of gold
This number may seem impossible to many today, but compared to what happened in Mexico, it is not (they dropped three zeros after all). I believe our politicians would sign off on such a plan, as it would wipe out our national debt and they could start over by spending again at deficits. The alternative is to dramatically cut spending, which they will never voluntarily do since it would lead to a massive depression. The reality is some have said the US never has to pay off its debt, and they will be proven wrong. It would be a depression without government spending, and they will do all they can to avoid it. Thus, the national gold reserves will be shipped off to those that own our debt. They may not like the sound of it being at $136,302 per troy ounce of gold, but it is all they will ever get, and will take it. Most people in the US might end up like those in the old Soviet Union did just after it collapsed. Without all the social programs, it will be real homelessness and people dying in the streets.
For those that think the price of gold today is too high, it is actually the opposite. The prices will eventually be what it takes to pay off our debt, as It is all we have. So that is what seems to be where we are now, and is only my best guess of where our debt leads us down the road to poverty for many.
Comments
If the gold were to be shipped, don't send it FedEx. Probably will be lost.😆
I worry more about the next iceage. When Canada, Ukraine, the US and Russia are frozen all year, it will mean billions of starving people in less than a year. Nearly everyone in a city will perish, they will head out in search of food, your food. That is going to happen in the next few thousand years. Being broke, ahh, my family came from Ireland during the famine and post famine, not worried. I am worried about my descendants surviving.
One day the treasury auctions will fail, and that will be the day it all starts.
Somehow, someway I feel the powers that be will just alter the rules and move the goalposts to solve the debt issue. It's their game,their rules.
What gold reserve? The small bit at West Point for the US Mint?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I hold some piddly amount of treasury debt, and I am not in the least interested in being paid in gold at $136302 per ounce. Fiat money for me please!
Goldfinger knows where it is.
You can monetize a debt with inflation and that is what we are doing.
Debt is just some imaginary digits on a computer screen. One, maybe 2 clicks and the problem is solved.
Get out and enjoy life people. All this bunker dwelling doom and gloom is not good for your wellbeing. It's a beautiful world out here and it be BOOMIN. RGDS!
The whole worlds off its rocker, buy Gold™.
Since American folk and entities own most of the debt, that would be good, right?
Knowledge is the enemy of fear
The Federal Reserve owns most of the debt, not "American folk". Nobody else wants to buy it, with $36 trillion in debt overhang that can't ever be paid back, only rolled over and over at higher and higher levels.
I knew it would happen.
No jmski....American folk and entities own most of it.
Your editorializing doesn't change the facts.
Knowledge is the enemy of fear
Yeah, I should believe the data that you think is accurate and real? I don't think so.
A perfect example of the bogus info being pushed is the 818,000 job revision. Please explain how this isn't intentional.
Just because Blackrock & Vanguard have a position in US Treasuries doesn't mean that the American folk intentionally decided to buy US debt. It means that American folks' money is being deployed to support a bankrupt government and that anyone who keeps money in those entities is due for a rude awakening.
I do think that the Fed is too opaque and it's more than likely that they have two sets of books. Otherwise, the Fed would be audited, just like any other quasi-governmental agency.
I knew it would happen.
ya got that right
Fort Knox, KY.
It isn't. Tons of data compiled by BLS, BEA, and Commerce have huge revisions. They also do periodic long-term revisions called benchmarks.
The big variable now is the discrepancy between the Payroll (establishments) and Household (individuals) numbers. They are probably being distorted by the levels of (illegal) immigration but it's a new phenomenon and they haven't got any definitive answers.
Nonsense. You don't know how debt markets work. The government isn't bankrupt. Treasuries are the global gold standard for debt and safety.
The Fed is audited by GAO. The Fed also has paid about $75 billion a year the last 10-12 years back to the Treasury. I'd worry less about the money-making Fed and more about bleeding cash entitlements.
No, the U.S. has the ability to service that debt via the #1 economy and the #1 growing economy over time. We also have trillions in other assets, from the military to natural parks.
The rule of law is also a factor in being a global reserve currency.
Goldfinger if you believe that and live long enough, you will be in for the shock of your life. What you talk about can't raise trillions of dollars to keep the credit card running.
That's why you are usually wrong.
Irrelevant to discussion
Yes it does because millions of folk hold their funds in 401k, iras, brokerage acct, etc.
It's your opinion that the Govt is bankrupt.
Yes, of course a conspiracy theorist would think there are 2 sets of books.
Knowledge is the enemy of fear
this applies only to those in debt who can print their way out of (or around) it. Debt is real to the Americans drowning in it, most of them made promises they can't keep and the holders of those promises want their money.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
But when the revisions are always worse, one begins to realize the data has a political use.
When an entity owes more than it takes in it is effectively bankrupt. Even if it can print money.
They make sure the numbers add up. They have no way of knowing if those reported numbers are real.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Everybody is going to learn what bartering is when it all comes down.
From AI-
"Bartering is the direct exchange of goods and services without the use of money. When money collapses, such as during hyperinflation or economic crisis, people often revert to bartering as a way to trade what they have for what they need. For example, someone might trade food for tools or services like repair work.
Bartering relies on mutual agreement about the value of the items being exchanged and often involves negotiation. It can be an effective way to sustain communities when traditional currency systems break down, as it allows for immediate transactions based on needs rather than monetary value.
So I expect the treasury to issue $2000 dollar bills and the US Mint to stamp out $100 dollar coins at the worst of it. Imagine trying to buy with those prices today? That's where it goes. This is why the gold reserves paying off the national debt is a real possibility if it gets that bad.
Mass bartering is a result of monetary chaos. Are you expecting such chaos?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Unless we stop the huge spending, it will happen someday, just like the sun comes up.
Yup, "mutual agreement". That will be fun.
Knowledge is the enemy of fear
Two added zeros is what will happen. Add two zeros to the price of gold, and it makes sense. A ten dollar bill today is a one thousand dollar bill at the bottom. The day they announce the gold reserves will pay off the national debt, the stock market will skyrocket after hitting historic lows. They have no alternative because 90% of the people become destitute otherwise.
People that want to survive should own things they can barter with, like the old silver coins.
I understand bartering is taxable.
Just barter with someone who doesn't issue an IRS Form1099.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
The rule of law is also a factor in being a global reserve currency.
Yes, the rule of law means that the law is applied equally, and across the board. We don't have that now. At all.
When Janet Yellen (illegally - according to the Dodd-Frank law) decided to bail out the 2nd & 3rd largest bank failures in American History, the Senator from Oklahoma asked her if some of the smaller regional banks in Oklahoma would be bailed out as well - and the answer was "no".
That's just one example, but there are many more in recent years. Many more. You decide whether there is equal application of the law. Sooner or later, it will affect YOU as well.
I knew it would happen.
Janet Yellen made the worst mistake in the history of the Treasury, which has helped pave the way for a debt disaster, Stanley Druckenmiller says. "When rates were practically zero, every Tom, Dick, Harry, and Mary in the United States refinanced their mortgage," Druckenmiller said. "Unfortunately we had one entity that did not, and that was the US Treasury." "I literally think if you go back to Alexander Hamilton, it was the biggest blunder in the history of the Treasury. "
Had she locked in lower rates, it would have saved the country trillions of dollars. Instead, we are closer to losing control of our debt.
Had she locked in lower rates, it would have saved the country trillions of dollars. Instead, we are closer to losing control of our debt.
Yellen is part & parcel of the Fed banking cabal and has no interest in saving the country money.
I knew it would happen.
Gold is a great investment at the current time. The devaluation is only going to accelerate until they reach their goal of impoverishing everyone who might stand against them, or they change their mind (not gonna happen).
God bless all who believe in him. Do unto others what you expect to be done to you. Dubbed a "Committee Secret Agent" by @mr1931S on 7/23/24. Founding member of CU Anti-Troll League since 9/24/24.
Sure you can, and certainly for longer than you can "live long enough." As Keynes said, "the markets can remain irrational longer than you can remain solvent." In this case, I'm not sure it's irrational.
Greece remained solvent for 30 years after embracing Socialism and the Euro. It took 3 decades to implode a 3rd-rate tourist-dependent economy.
How long do you think it will take to capsize the global reserve currency superpower with the largest, most liquid bond and stock markets on Earth....and with the rule of law and private property rights behind them ?
You think anybody is trusting Putin, the CCP, or Da Brics ?
Yellen has never worked for a bank. Maybe she's part of the Zoo Cabal -- she's never worked for the Bronx Zoo, but hey, just run with it.....
Gold's fundamentals line up. It has nothing to do with devaluations and the like.
Yellen has never worked for a bank. Maybe she's part of the Zoo Cabal -- she's never worked for the Bronx Zoo, but hey, just run with it.....
As past Chair of the Fed, she indeed "worked for a bank".
I knew it would happen.
Well, we can eliminate that now.
Knowledge is the enemy of fear
So I guess they made fantastic profits that put all the other S&P 500 sectors to shame, huh ?
Stocks did fantastic, right ?
So I guess they made fantastic profits that put all the other S&P 500 sectors to shame, huh ?
Stocks did fantastic, right ?
Try to stay on topic. I don't believe I've made any commentary on bank profits or stocks either.
I have said that the Fed is an unaccountable criminal enterprise and has no business setting interest rates or monetary policy and they certainly shouldn't be allowed to create "money" from thin air in order to buy any type of securities including stocks or bonds.
But they do.
I knew it would happen.
Quarter way into the 21st century, stonks and crypto look set to rule the remainder. PM's to most are nothing more than barbaric relics and could never pay off this debt. DOGE coinz maybe. ~Sid
You said that she and others are part of a "banking cartel." I am telling you that the last 15 years have been HELL for banks. ZIRP was a disaster -- costing banks and financial institutions (i.e, brokerage houses, mutual funds) TENS of billions each year.
Fidelity Investments alone probably lost $1 billon each year from ZIRP.
Yeah, J6P should be setting rates!! Or redneck hillbillies!!! I want 20% guaranteed for 30 years!!
Love ya jmski.
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Knowledge is the enemy of fear
I want 20% guaranteed for 30 years!!
If there was a free market, the 30 year bond might have to go to 20% just to cancel the inflation that's coming.
It wouldn't do much for the economy, though. If there was no Fed, the market would adjust by itself.
I knew it would happen.
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You seem to keep repeating the argument that we shouldn't closely scrutinize banks because they haven't been making a lot of money. That is exactly what the banks want people to think. You evidently have friends and connections there, since you work in that arena. So your apologetic portrayal is not surprising. In fact, it seems to be standard bank speak.
But member/owner banks of the Federal Reserve have been making money.
You bring up Fidelity Investments and how they lost a billion dollars each year due to low interest rates. This is not true. It is exactly the type of "bank speak" I am referring to. Perhaps (or perhaps not) their profits would have been a billion higher if interest rates were higher. But they didn't "lose" any money, certainly not a billion per year. In fact, they still made a lot. They have actually had record profits every year, for the last 10 years. This data (below) is what I compiled in a couple minutes of looking up various news articles:
2015: 3.2 Billion
2016: 3.5 Billion
2017: 5.3 Billion
2018: 6.3 Billion
2019: 6.9 Billion
2020: 7.2 Billion
2021: 8.1 Billion
2022: 8.2 Billion
2023: 8.5 Billion
2024: ?
That doesn't appear to be a company that we should have pity for. In fact, maybe it is a good company to buy stock in ?
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Wrong Fidelity.
Lol
Knowledge is the enemy of fear
From your mouth to God's ears.
But we were promised no more inflation.....
Knowledge is the enemy of fear
But we were promised no more inflation....
By whom?
I knew it would happen.
Highly unlikely, since interest rates of 12-14% were enought to stop inflation that peaked at 10-11% after a rising decade. REAL interest rates are restrictive, they were NEGATIVE in the late-1970's.
Maybe...but an internal adjustment is wrenching. Do you think prices and wages are perfectly flexible like in an Introductory Economics textbook ? Check out the EU and their "adjustments" the last 25 years....lost wages and output...falling nominal GDP....a rising Denominator Effect.
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The chart was wrong, but the profit numbers I posted are for the correct "Fidelity Investments" company.
The parent company of Fidelity Investments (FMR LLC) is apparently privately-held.
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