America’s Secret $365 Billion Asset: “It’s Gold"
goingbroke
Posts: 1,410
The U.S. isn't going back to the gold standard any time soon (sorry, Ron Paul & Co.) and it costs money to secure the heavy metal. We need the money badly, and we'd be selling into a very hot market. Critics (including Rep. Paul) have charged that policies of the Federal Reserve have hurt consumers and taxpayers by boosting the money supply and contributing to the rise in price of hard assets like gold. But America's taxpayers collectively own nearly 9,000 tons of the precious metal. If the government simply marked this asset to current market values, taxpayers would become among the biggest beneficiaries of the rise in gold.
why not consider selling at least some of the gold?
why not consider selling at least some of the gold?
Many successful BST transactions ajia
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(x2,Meltdown),cajun,Swampboy,SeaEagleCoins,InYHWHWeTrust, bstat1020,Spooly,timrutnat,oilstates200, vpr, guitarwes,
mariner67, and Mikes coins
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Comments
" Of course, there are plenty of good reasons not to sell off our national treasure. Asset sales are a classic one-shot technique — they improve the current year fiscal situation while papering over recurring structural problems. Plus, even if the U.S. were to dump all its gold tomorrow at the current price, the revenues would only cover a small chunk of this year's deficit. And while currencies come and go, gold has been agreed-upon storehouse of value for millennium. Ultimately, it's a bad idea to hold a clearance sale on the nation's gold for the same idea it would sell off Yellowstone Park or the Tennessee Valley Authority. All represent valuable assets that were intended to be held in trust for future generations "
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There has been chatter that the State Department / White House is negotiating with Bejing to allow China to purchase US assets with their US Securities (the so called "weather ballon") nothing official that I could find... yet.
Box of 20
"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>Bill Clinton and his cronies in crime, under orders, emptied Fort Knox and replaced the loot with tungsten filled bars. It's all worthless if ever removed from the vault but remains priceless as long as it sits there as an "asset." Reason its still valued at only $42.22 an ounce is because that is all each bar is worth when you consider the gold shell that holds the tungsten. The math for 42.22 an ounce still puts an accurate value of the actual gold that remained behind. When they looted Ft. Knox for the their masters it was rumored that Rubin kept a few of the real bars and substitued "fakes" in what he sent to the "elite." >>
Total bullchit.
"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>You are talking about ONE interest payment on our current debt!
Also 1/4 of this YEARS national deficit.
I want you to imagine that you own more gold than anyone in this PM forum.....by more than TWICE as much as the next closest guy. Now imagine that if you sold it all, you would still be 97.5% in debt in relation to your debt before you sold. Think about that. Thats how messed up our current system is. This nation is insolvent....if it were a private company, it would be bankrupted long ago. Instead, it just keeps issuing shares of stock (dollars) to those naive enough to accept them. Sooner, rather than later, it will all come crashing down.
Giving away that gold now would be extremely short-sighted. Even though officially valued at $42/oz, the gold market knows what it's worth and where it is. Besides, officially revaluing the gold would imply a lot of inflation has gone on during the past several decades. Can't afford to whip up the sheeple any more than they already are. The sheep can understand 2-3%/yr as brought to you by the CPI (constant price index)....but a 34X increase in gold prices would cause more to question just what has been going in for the past 40 yrs. Heck, they might even want to buy the stuff.
roadrunner
<< <i>
<< <i>You are talking about ONE interest payment on our current debt!
Also 1/4 of this YEARS national deficit.
Correct! Not 1/4 of this year's budget.....but rather just 1/4 of this year's shortfall.......thats right folks....25% of 1 year's shortfall. In other words, if every oz of gold this nation owned was sold at these historic high prices, this years budget DEFECIT would be $1,000,000,000,000 instead of $1,360,000,000,000. Now THATS funny!!!!
<< <i>The 8133 tons of gold (if there) will be sorely needed to ensure a good seat at the table when the day finally comes to renegotiate a new world's currency.
Could not have been better analyzed!!!
<< <i>
<< <i>
<< <i>You are talking about ONE interest payment on our current debt!
Also 1/4 of this YEARS national deficit.
Correct! Not 1/4 of this year's budget.....but rather just 1/4 of this year's shortfall.......thats right folks....25% of 1 year's shortfall. In other words, if every oz of gold this nation owned was sold at these historic high prices, this years budget DEFECIT would be $1,000,000,000,000 instead of $1,360,000,000,000. Now THATS funny!!!!
Our gold supply is neither collateral nor the source of the cash flow which services our Federal debt. Federal debt is backed by nothing more nor less than the power to tax- the power to claim a portion of the earning power of all the economic entities of the Nation. That earning power, and the cash flow that the tax stream represents, is an order of magnitude more valuable than the gold in Ft. Knox:
Annual GDP, US: $14Tn
Estimated US tax rate, annual: 24-28% of GDP, call it 26% (Heritage Fndn vs. OECD 2009 numbers) -> $3.64Tn/yr
Value of 9kT of Ft. Knox gold, $375Bn
Coverage ratio of power to tax, per year, vs. one time value of US Fed gold: almost 10:1.
Coverage ratio of power to tax, per year, vs. total of all US debt outstanding, all maturities: 1:3.8.
The nation is not insolvent. Not even close. We'll just have to readjust our spending priorities, whether we want to or not.
(edited a math error on second to last line)
<< <i>I want you to imagine that you own more gold than anyone in this PM forum.....by more than TWICE as much as the next closest guy. Now imagine that if you sold it all, you would still be 97.5% in debt in relation to your debt before you sold. Think about that. Thats how messed up our current system is. This nation is insolvent....
Our gold supply is neither collateral nor the source of the cash flow which services our Federal debt. Federal debt is backed by nothing more nor less than the power to tax- the power to claim a portion of the earning power of all the economic entities of the Nation. That earning power, and the cash flow that the tax stream represents, is an order of magnitude more valuable than the gold in Ft. Knox:
Annual GDP, US: $14Tn
Estimated US tax rate, annual: 24-28% of GDP, call it 26% (Heritage Fndn vs. OECD 2009 numbers) -> $3.64Tn/yr
Value of 9kT of Ft. Knox gold, $375Bn
Coverage ratio of power to tax, per year, vs. one time value of US Fed gold: almost 10:1.
Coverage ratio of power to tax, per year, vs. total of all US debt outstanding, all maturities: 1:1.
The nation is not insolvent. Not even close. We'll just have to readjust our spending priorities, whether we want to or not. >>
So you think that if...hypothetically....Obama came out in the media tomorrow and publicly stated that there is no more gold in Ft. Knox, and that the U.S. had sold it clandestinely long ago, that the USD value would'nt be severely affected immediately? You cannot be THAT naive, could you?
The nation currently has $14 trillion in CURRENT debt, in addition to a NPV of -$46 trillion in SS and Medicaid.....thats a total NPV of -$60 trillion dollars.
There are approximately 130 million houses in this nation. Lets say that they are valued at an average of 250k each, and lets further assume that all 130 million were completely paid off. If the government could legally seize ownership of every one of them, and then sell them to raise capital, they would still only be halfway to their obligations.
What assets does the U.S. own to offset $60,000,000,000,000?
Lets look at it another way. There are 320 million people in this country. That represents $187,500 worth of debt for every single person in this country. From the wealthiest to the newborn. You are the head of a family of 4? Congrats, that'll be $750,000 please!
To think the U.S. can tax its way out of debt is simply a moronic concept. The stated U.S. GDP is currently $14 trillion or so....if you believe the official numbers that is. But lets take them for their word. $14 trillion TOTAL output. 2009 total government revenue (including all taxes and fees like the USPS) was $2.7 trillion. That means Uncle Sam took about a 20% bite from the entire GDP. Lets assume that they could TRIPLE this rate to 60%. Of course that would collapse the economy completely, but lets have some fun and assume everyone was ok with this. The new revenues....assuming GDP stayed at $14 trillion...would be $8.4 trillion per year. Lets further assume that the U.S. does not increase spending of any kind at all, and maintains government expenses at $3.7 trillion. Lets further assume that NONE of the $60 trillion in current NEGATIVE NPV obligations ever increases.....it would take over 12 years just to get back to ZERO.
My conclusion is that this nation IS insolvent, and that you MUST be either delusional, or a member of the FED to claim otherwise.
roadrunner
What's naive is to think that the economic value and creditworthiness of our nation is in any meaningful way related to the gold we're sitting on.
If a bank makes you a loan, they're not going to care how much gold you're sitting on either if you have no cash flow to service the debt. They might require collateral but that's not what they loan against- they loan against income streams. Just ask any asset-rich person with no income stream how easy it is to get a bank loan.
The Nation's gold collateralizes nothing- it doesn't back our debt or our currency. You can speculate about it's effect on confidence all you want but from an economic point of view, it's an irrelevant anachronism.
What assets does the U.S. own to offset $60,000,000,000,000?
The power to tax a revenue stream of 14Tn/yr (and growing) at 25%/yr. If we can allocate only 20% of that 25% to debt service, that's $700Bn/yr. While that's only 1.1% of your NPV, the timeframe over which this $60Tn needs to be paid is extremely critical to determining whether this pencils out or not, as are the assumptions made in the discounting and growth rate of those obligations. The growth rate of that tax base is also important.
Look, no one's saying our current obligations aren't insane, they're not. But neither are they cast in stone, and the Nation is not broke, it's not insolvent and we have a tremendous economic capacity for paying the bills.
Now back to my original point, which I will make again- the gold in Ft. Knox is totally irrelevant to these calculations, or this dilemma.
"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
The Nation's gold collateralizes nothing- it doesn't back our debt or our currency. You can speculate about it's effect on confidence all you want but from an economic point of view, it's an irrelevant anachronism.
Central Banks do settle debts in gold or at least via gold book entries/loans/leases/swaps, etc. It's the only money between themselves that they really trust. Gold is the ultimate extinguisher of debts. FRNS, TBonds, even income streams do not perform that function as they are just various forms of IOU's/liabilities. Those paper flows just move debt around, they never remove it. And that implicit trust of gold shows up in the credit worthiness of a nation, if no less than in good will. I've always been of the opinion that even though there is no official gold standard, there's always an unofficial one applying backing to a nation's currency, even if more symbolic than in a strict accounting sense. And with the US as the holder of the world's reserve currency since 1944, that symbolic measure of gold is very important, hence the need to keep our stash intact. In the 1970's the price of gold rose dramatically basically rose to cover the US foreign debt. It also rose far enough to more than cover the Monetary Base (M0) for currency in circulation + FED bank reserves. That was a checkbook balancing that was decades overdue. In the same manner, gold is once again going through the same check book balancing last done in January 1980. It's the only reason the price of gold is going up. One can't say that it's going up due to industrial demand or any other economic reason....but strictly for balancing debts/money supply. In that sense, gold is assessing the credit worthiness of the currency (ie nation) involved. If it were irrelevant, it's price wouldn't have risen 5.6X in the past 10 years. In fact all central banks would have dishoarded their 31,000 tons at $255/oz and been happy to be out from under such a barbarous relic. Yet for some reason they're now net buyers of this irrelevant ananachronism. Gold standard or not, gold keeps coming back to reprice currencies and governments. It may be late to the game sometimes or be toyed with for years at a time. But it eventually shows up to do its cleansing. Someone ought to tell gold that there is no longer a gold standard and to stand down. Like most inanimate objects, it's hard of hearing.
The fact that gold has risen in price for 10 yrs indicates it's not naive or irrelevant....either that or we highly educated 21st century people still worship golden idols like our ancestors of 3000 yrs ago. Both Egypt and North Vietnam have ceased exports of gold. Is that because it's of no monetary importance to those nations? Why not put a restriction on cash or income flows leaving the nations? You can't put a price on a nation's confidence or "good will." It's priceless.
As gecko109 suggested, see what happens if the people find out and eventually believe that precious metals, currencies, interest rates, and CPI/GDP statisitics have been the key parts of one giant Ponzi scheme to transfer wealth from the people to the elite over the past 40 yrs. If the metal in Fort Knox were gone and was used towards such a scheme, there would be heck to pay. The FED's charter comes due for renewal in 2013. A good time to fully debate all these issues.
roadrunner