Posted on 05/17/2011 12:21:08 PM PDT by statestreet
NEW YORK — The next big question on the federal debt limit could be whether to start selling the government’s holdings of gold at Fort Knox — and at least one presidential contender, Ron Paul, has told The New York Sun he thinks it would be a good move.
The question has been ricocheting around the policy circles today. An analyst at the Heritage Foundation, Ron Utt, told the Washington Post that the gold holdings of the government are “just sort of sitting there.” He added: “Given the high price it is now, and the tremendous debt problem we now have, by all means, sell at the peak.”
(Excerpt) Read more at nysun.com ...
“There is over $1.5T in US cash currency.
For those wanting to return to a gold standard, we’re about 1,473 million ounces short.”
That isn’t how the gold standard works. The dollar simply has to be made convertible to gold at a fixed price. When Alexander Hamilton made the Continental Dollar convertible to gold there was very little gold in the US but a lot of dollars.
Do you really think that defaulting intentionally wouldn’t have SEVERE consequences? Like our foreign creditors storming in and just TAKING that gold?
OK if that really happened...what would happen to the average:
Laborer in manufacturing
Banker
Government worker
Corporate drone
Service worker
Homeowner with a mortgage
Saver
Investor
Person on social security/food stamps/etc
I’d imagine the fallout would turn the entire country more or less into the West Bank.
A better way to describe it would be “pegging” our currency to gold, right?
“A better way to describe it would be “pegging” our currency to gold, right?”
Pretty much. Under the gold standard, gold served as the monetary base and supported a large quantity of what used to be called ‘credit money’ in the old terminology.
People have the mistaken belief that every dollar in the economy was backed by a dollar’s worth of gold, but that’s not how it worked. Fractional reserve lending operated under the gold standard just as it does today.
There are problems involved with a gold standard, but its virtue is that it serves to restrict the over-creation of money. If people believe that the monetary authority is being too loose with the creation of money they will begin redeeming their dollars for gold. The resulting drain of gold reserves from the banking system forces a reduction in the amount of credit money outstanding.
First, default would have serious consequences. No doubt. But you should consider the alternatives.
Forced default 3-5 years into the future after the dollar is thoroughly debased and worthless? Or, actually trying to extract enough money out of the economy to PAY both the interest and the debt which is growing at a faster pace than ever before? Forever enslaved?
It's time the American people realize they are the victims of the greatest scam in the history of the world. Yes, we as a people are responsible for letting it happen...and many complicit. However, it's time to wake up and smell the coffee. The USA will never, ever pay that debt. And as interest rates inevitably rise the interest will begin to cross the $1tril/yr threshold.
You think the American taxpayer is going to pay that? The only way it will actually get paid is it's paid with a debased currency worth pennies on the dollar. And once that starts there's only one end. That's the end of the dollar and likely the USA.
We need to manage ourselves out of this mess. That starts with a declared default.
Why would they storm in and take it when they could just NUKE us?
(looking at you ChiComs)
Heh, bringing in that silly old and outdated Constitution again. Do you think Obambi and Crew will take heed of anything our founders said about gold standard?
Isn't there enough devaluation of property equity going on now without the feds accelerating it by dumping a lot of property on the market?
The developers aren't building much now, so they aren't going to pay much if anything for U.S. property.
The point is we’re heading toward bankruptcy anyway. Best to do it on our own timetable and retain some assets rather than sell everything off just so the politicians can continue with their spending spree and then end up in the same place just a little later.
We wouldn’t be the first country to default on our debts, nor would we be the last. Nor would it be the first time that the U.S. had effectively defaulted on it’s debt. That said, a default would definitely stink in the short term. It’s unfamiliar territory for Americans and for that reason, a bit scary. A “west bank” scenario is not likely. Several countries have defaulted since 2000 and they seem to be OK. Not great, but they seem to have come through it without a civil war, mass starvation, killing fields, or anything all that dire.
Here are some countries that have defaulted since 2000: Ecuador, Ukraine, Peru, Argentina, Moldova, Uruguay, Dominican Republic, and Belize.
“Bad money drives out good.” if we return to a gold standard without enough gold to back up most of that currency, it will get “exchanged” out of existence fast.
I recall reading somewhere there were quite a few tungsten bars fabricated during the Clinton Administration...
Since I buy in with the concept that government... derives its just powers from the consent of the governed, I'd say 'We, The People' should be the ones at the top of the power pile.
Just serving all those eviction notices alone...sheesh! it'd cost more than the state...
That would be fine with me and I own a lot of gold and silver. The reason that I own it is precisely because the Federal government can't do what you say because they are too far past the point where it would make a difference. The only way they could conceivably pay off enormous debts is for the price to shoot up a lot more, and believe me, I would be selling by then.
———The only way they could conceivably pay off enormous debts is for the price to shoot up-——
Very interesting....... the question then becomes at what price will the sale of the gold stock pay off the debt, or half the gold pay off half the debt?
“I don’t think the founding fathers ever envisioned that much of any state’s land being in the hands of the federal government (or the state government for that matter).”
True - but worse yet, to whom would you suggest all this land be sold? China? Some Saudi princes? Foreigners already own WAY too much of our country, including chunks of New York City.
How about just putting that land back into the hands of the states from which it was confiscated and finding ANOTHER way of raising money, hmmm?
Since we’re the “Saudi Arabia” of natural gas, maybe we should be allowed to bring a whole lot more of that to market!
I was told that one part of Obamacare is banning private ownership of gold. Is it true?
Hitler and FDR both banned private gold ownership.
“If the government dumped a ton of gold on the market, the price would slump, and might slump hard, taking years to recover to anything close to current values, if it recovered at all. It’s a bad idea.”
Oh, it’s a bad idea alright, but not for the reason you cite. Aggressive buyers, led by China, would simply scarf it up as they’ve been doing for the last couple of years.
“we should be buying all the gold with our phony money so at least when we start over wed have something to back it with”
You’re so right. Why do you think China’s been buying up as much of the world’s precious metals and minerals as possible over the last year or two?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.