10/27/10 Stockholm, Sweden – In November’s new issue of The Atlantic, James Picerno poses the question of why, given such lean times, “is $300 billion worth of government treasure simply sitting in vaults?” He’s referring to the US stash of gold reserves. Although there are a number of good reasons for the status, it’s interesting to consider what reasons the federal government is willing to offer publicly.
From The Atlantic:
“Getting straight answers (or any answers at all) from Washington about our hoard of gold is weirdly difficult. Yes, the government can downsize its holdings, said Congressman Brad Sherman, a member of the Subcommittee on Domestic Monetary Policy and Technology, through a spokesman. No, it’s not a good idea, he added, offering no elaboration. When I called to interview the subcommittee’s chairman, Representative Mel Watt, his office begged off in an e-mail, advising only that he ‘hadn’t studied this particular issue as of yet.’
“Repeated calls and e-mails to the White House press office went unanswered. The Treasury Department referred me to the section on gold in the U.S. Code. When I pressed for more information, a public-affairs official e-mailed back: ‘Gold? Don’t you have anything better to write about[?]‘
“…Under current law, income from the sale of gold must be used to reduce the national debt. But nothing would stop Congress from rewriting the regulation to permit other uses. By Washington’s corpulent spending standards, $300 billion may seem modest, but it’s hardly trivial: it could, for example, reduce our $1.3 trillion budget deficit by more than 20 percent; finance Social Security for nearly six months; or fund unemployment benefits for several years—in effect, create a stimulus package without pushing us further into debt.”
It seems rather obvious the last thing the feds would do is spend the cash on paying down the national debt while failing to consider any austerity measures. Instead, the recommendations above for simply spending gold – especially rather than cutting expenses — are of dubious value. Alongside the US military, the gold reserve is probably one of the nation’s not-yet diminishing assets that still insulate the US’ dwindling credibility as home of the world’s reserve currency.
You can read the full details in The Atlantic’s coverage of Uncle Sam’s mysterious hoard.
Best,
Rocky Vega,
The Daily Reckoning
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
Except that…..
There is no gold left. It’s all been lent out or swapped to the primary dealers. Even if it was still under the control of the morons (both Red and Blue)in Washington, it wouldn’t go very far in reducing the National Debt (officially standing at $14 Trillion) and pushing the $1.3 Trillion current deficit, as though it is the most serious concern, into the media is alarming in its elegant deception.