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Astonishing response by Dutch central bank Governor Knot when his solvency is questioned due to coming losses: use gold revaluation account. pic.twitter.com/yIZXc1aRWH— Jan Nieuwenhuijs (@JanGold_) November 2, 2022
If YOU would like to be on a Gold & Silver PING LIST, please pm me.
The Gold & Silver Ping List covers the following:
Everything Gold & Silver
Stock market investments in mining companies,
etc.
Hmmm...
Let me see if I have this straight.
A nation accumulates gold at a very low price. Then they print money. Over many decades people KNOW that the nation has a supply of gold and they know what it is worth in the open market.
But the nation pretends that the gold is only worth what they paid for it. At the same time the nation prints additional currency and takes on debt to make it appear that everything is just rosy.
Then the nation finds that it must raise interest rates in an attempt to maintain the value of their currency. Otherwise holders of the currency experience declining value of the currency. Those holding the debt experience huge losses because the value of their debt is based on the interest rate they agreed to, but the new interest rate is much higher.
The nation experiences trouble selling new debt and their expenses for servicing existing debt balloons. The nation dare not raise taxes for fear of a depression.
Fortunately, the nation has gold reserves. Everybody knows that the value of these gold reserves has risen over many decades despite that the book value has been constant since its acquisition.
By the simple expedient of "revaluing" the gold, suddenly that nation's problems have been relieved, despite assurances that none of the gold will be sold. It's economic magic. The gold doesn't even have to exist.
What am I missing here?
Imagine that the assets in question were government buildings instead of gold. Imagine that the nation valued these buildings at what they cost to build. Now imagine the presumed benefit to the nation of valuing such buildings at their presumed present value, despite no intention of ever selling any such buildings. Why would any sane person imagine that the nation was more solvent simply by this change in "accounting"?
