RSS 2.0 FeedWho Needs Fort Knox?
by Brad WarbianyWith the Ron Paul candidacy official, we might finally have a debate in this country over the differences between a currency backed by precious metals and a currency backed by government promises.
In response, you might hear my co-blogger Kevin suggest that Ron Paul’s advocacy that we go back to a gold standard to be “crazy”. Well, maybe that’s a crazy suggestion, and maybe that’s not. Either way, some interesting questions can be raised.
I was thinking about it today. If we’re not going to be on a gold standard, why the hell is our government hoarding gold? After all, we’ve got plenty of gold in Fort Knox, and if we’re not going to back our currency with it, there’s no reason to keep it, is there.
And that’s a LOT of money. Right now it’s about 4,570 metric tons, which is roughly 147 million Troy ounces of gold. At current prices of 640 USD per ounce, that’s nearly $100 Billion USD that our government could liquidate to pay for any number of things that are necessary. I’m sure they’d love to raise taxes by $100 Billion, but since they can’t do that, why not liquidate their gold holdings?
For those of you who don’t think we should consider being on a gold standard, do you have any objections to selling our national bullion? If not, why not?
I wouldn’t have any objections to selling off Fort Knox. The amount of gold there is nowhere near enough to back a currency if we decided to return to the gold standard.
However, here’s the million dollar question, who would buy it?
Comment by Kevin — March 14, 2007 @ 3:27 pmI’d buy some…
Gold prices have doubled in the last 5 years. There’s definitely demand to own it.
Comment by Brad Warbiany — March 14, 2007 @ 3:43 pmThe Federal Reserve system is not federal, and there is no reserve. In 1913 the Congress removed from themselves the constitutional power to print currency and gave it to a private bank. The owners of the fed bank are not known to the public. When they create money from thin air, by issuing debt, the dollars held in your savings account are diluted of value. Fiat money is theft. It is the means by which our current government is able to borrow from China to attack Iraq, and charge it to your children and grandchildren. No need for a gold standard? You mean like, in slavery is security?
Comment by Biotite — March 14, 2007 @ 4:12 pmBiotite,
I’m in favor of a backed currency, even if it’s not necessarily gold. I’m currently worried about an American financial collapse due to a potential of our government printing their way out of their obligations. So I understand where you’re coming from here.
Comment by Brad Warbiany — March 14, 2007 @ 6:10 pmTHEM WHO DO NOT READ HISTORY ARE DOOMED TO REPEAT IT.
Comment by AL CURTIS — March 14, 2007 @ 7:39 pmIF PAPER IS AS GOOD AS GOLD—HOW ABOUT A PAPER RING?
READ== TEMPLE OF THE 13 SUNS.
Brad,
Do you really think that the gold is there, or in West Point (the other depository)? It has not been audited in over 50 yrs (national security you know). Who do you think “leases”(as in does not expect to get it back) gold to foreign Gov’ts, to artificially suppress the price of gold and bolster the worthless FRN’s. The only thing that has saved our currency has been it’s tie to oil. When we are no longer the Petro Dollar our currency is toast. Why do you think we invade sovereign nations when they start selling oil denominated in other currencies( I mean have WMD of course). It is too late to save the dollar, hopefully after the crash a commodity standard can come about.
Jeff
PS we are already in a hyperinflationary mode. (My defn. >= 10% money growth yr/yr.) Remember a year and a half ago or so when I was on a big rant about the banking cartel (fed) ceasing the publication of M3. Well wait until you see the credit factory print money in a few months/ year after the fallout from the unwinding of the Yen carry trade and SubPrime lending debacle. You are going to pray for “just” Hyperinflation. If we’re lucky the market forces will prevail, institutions will invoke sound lending practices, cutoff credit, and we will have a bad recessinon. If we are not lucky credit pushers will continue to push greater volumes at decreasing profit margins and credit junkies(american consumers) will keep spiking their arm and we will have a hyperinfationary crash/depression in 5 yrs.
Comment by Jeff — March 14, 2007 @ 9:56 pmJeff,
I had heard that thought about the gold not even being there. I checked Wikipedia (albeit not a completely reliable source), and they said it’s been audited in 1974 and 1981. Plus, that it goes annual audits of 10% of the bullion for authenticity. Now, that may be a lie. It is Wikipedia, after all.
You guys back from Oz now? I was looking for your thoughts on my End of an Empire post… I think I made the same point. We’re in a bad way with the end of the subprime market. If we don’t try to print our way out, we’ll have a nice painful recession. If we do try to print the way out, we’re looking at national— if not global— financial collapse, wars, and other very nasty things. Given the end of M3 tracking, and my general distrust of politicians to take the bad medicine, my money is on (rather contrary to) the printing press.
Comment by Brad Warbiany — March 14, 2007 @ 10:04 pmThe more I learn, the more sage seems putting a gold and silver restraint to legal tender in the Constitution. A dollar was literally a specific weight of silver. I favor gold and silver, over other commodities, because that’s what people have always turned to when fiat systems crash, as they all have. This global currency situation though is unprecedented. The whole world is fiat. I share your alarm about possibly immediate horrific collapse. Could the subprime mess set off the derivatives mess? But it’s no longer just the U.S. propping up the dollar. The whole world props it up. It’s possible this could go on for a long, long time.
Comment by Biotite — March 14, 2007 @ 10:29 pmSelling off the gold in Fort Knox (assuming it’s there, and I’m willing to bet it isn’t, at least in it’s original quantity) to pay for a measly $100 billion in government expenditures? Do you realize that will pay for only about 1 year’s worth of the Socialists — I mean Republicans — Medicare Prescription Drug Bill? Biotite hit the nail on the head, our monetary system, and our country along with it, was hijacked in 1913 by the bankers. Just whose gold do you think that is in Fort Knox? The governments? Bullshit! That was our great grandparents gold, and our grandparents, and our parents, and OUR gold. It used to be that you were issued a “receipt” for the gold, a paper dollar denominated bill, expressed as being worth a certain value in GOLD. You could take that note to the bank, and exchange it for the REAL money, gold. When they decoupled paper money from gold, they essentially stole our gold, and gave us a worthless piece of paper in return. That piece of paper has become more and more worthless over the last 100 years, and will be absolutely worthless eventually. On the bright side, when you can’t afford to buy toilet paper because it’s selling for $4000/roll, you can always use your dollars.
Comment by T. Byrd — March 16, 2007 @ 6:11 pmWho has title to the Gold? The FED, or the US Government?
Comment by Rick — March 18, 2007 @ 4:31 pm