Questioning gold wouldn’t do anything to the Fed. The Fed operated under a gold standard from 1913 until 1971 when President Nixon abrogated the postwar Bretton Woods monetary agreement. The Fed had no vote in the decision to cut the dollar loose from its last link to gold, that was a Presidential decision.
The Treasury, not the Fed, owned the nation’s gold supply and still does. The Fed adjusts the credit portion of the money supply. Congress granted it the legal authority to monetize Treasury debt and it’s not possible for it to go bankrupt. It’s not a commercial bank, it’s a monetary authority.
Do you know what JFK had in mind/planned when he ordered the issuance of silver certificates? Maybe this is what is being considered, but with gold, and maybe what Q is referring to - just my WAG.
Yes, the comment regarding Fed and Gold made no sense to me, perhaps what Q actually meant will be clarified.
Bretton Woods took place in 1944. In 1913, the reserve currency was the British Pound Sterling. UK maintained it’s peg to gold as WWI began. In Nov. 1914 the dollar began the process for conversion to the dollar being the reserve currency - they competed side by side for a while.
In 1939 @ beginning of WWII, UK suspended conversion of Pound to gold, leading to the eventual reform in 1944 known as Bretton Woods. Pegged Dollar to Gold @ $35/oz. and other currencies to the dollar. Nixon had to stop the ability of other countries to take payments in gold @ $35/oz. and sell it in the open market @ $40/oz.
I personally think we are beginning the transfer from the dollar as reserve currency, most likely to SDRs under the International Monetary Fund, if the Financial Gurus get their way.
Most descriptions I have read, consider the Fed to be a corporation. It also has financials such as The Balance Sheet of Assets, Liabilities, Net Assets.
If the liabilities exceed the Assets, I’d call that bankrupt regardless of whether it is a unique bank or monetary authority.
In Lewis v. United States,[77] the United States Court of Appeals for the Ninth Circuit stated that: “The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations.”
Below is the balance sheet as of 6 July 2011 (in billions of dollars):
Note: The Fed balance sheet shown in this article has assets, liabilities and net equity that do not add to the balance. The Fed balance sheet is missing the item “Reserve Balances with Federal Reserve Banks” which would make the figures balance.
ASSETS:
Gold Stock
11.04
Special Drawing Rights Certificate Acct.
5.20
Treasury Currency Outstanding (Coin)
43.98
Securities Held Outright
2647.94
U.S. Treasury Securities
1623.78
Bills
18.42
Notes and Bonds, nominal
1530.79
Notes and Bonds, inflation-indexed
65.52
Inflation Compensation
9.04
Federal Agency Debt Securities
115.30
Mortgage-Backed Securities
908.85
Repurchase Agreements
0
Loans
12.74
Primary Credit
12
Secondary Credit
0
Seasonal Credit
53
Credit Extended to AIG Inc.
0
Term Asset-Backed Securities Loan Facility
12.67
Other Credit Extended
0
Commercial Paper Funding Facility LLC
0
Net portfolio holdings of Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC
60.32
Preferred Interest in AIG Life-Insurance Subsidiaries
0
Net Holdings of TALF LLC
0.75
Float
-1.05
Central Bank Liquidity Swaps
0
Other Assets
133.56
Total Assets
2914.51
LIABILITIES:
Currency in Circulation
1031.30
Reverse repurchase agreements
68.09
Deposits
91.12
Term Deposits
0
U.S. Treasury, general account
76.56
U.S. Treasury, supplementary financing account
5
Foreign official
0.17
Service Related
2.53
Other Deposits
6.85
Funds from AIG, held as agent
0
Other Liabilities
73.06
Total liabilities
1263.73
CAPITAL (AKA Net Equity)
Capital Paid In
26.71
Surplus
25.91
Other Capital
4.16
Total Capital