Some plans I've seen for a return to sound money involve totalling the gold held by the government and dividing it by the number of FRN dollars outsanding in order to find the value of the specie-backed dollar.
I have a few questions about this: 1) Does the Federal Reserve own gold? Or does only the Treasury? 2) If the Fed does own gold, to whom does it belong? The Fed and its member-banks? Or the people/government of the U.S.?
Thanks!
Thanks. Yes, I have verified that the Fed itself does not own any gold. That's good.
http://en.wikipedia.org/wiki/United_States_Bullion_Depository ???
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
The gold the Fed holds is "in trust" for others -- foreign governments, banks, etc. It does not belong to the Fed itself.
thanks for exlaining happy to learn.
p.s. what is the banking reserve rate (is that what gives the fed its name?). does the fed need to hold ANY gold in reserve or is that an ancient relic?
nirgrahamUK:thanks for exlaining happy to learn.
Haha, that's funny because I was the one who initially asked the question!
nirgrahamUK:p.s. what is the banking reserve rate (is that what gives the fed its name?). does the fed need to hold ANY gold in reserve or is that an ancient relic?
The U.S. dollar is not backed by gold. The Fed holds gold as a service for clients. The "reserve" aspect of the Federal Reserve System refers to the percentage of paper dollars banks must keep on hand for every paper dollar they lend. Currently, that rate (the reserve ratio) is 10%. But it has nothing to do with gold.
In other words, when you deposit $100 in a Fed member bank (and virtually 100% of banks in the U.S. are part of the Federal Reserve System), the bank can then lend $1,000 -- your $100 + $900 worth of money that it creates out of thin air.
The Fed is not a true part of the government.Its a corporatist(fascist) entity, privately owned and mostly independent.
I like Ron Paul's idea, make gold(and silver) legal tender and tax exempt. That would be a true market solution.
Peace
The degree to which the Fed is indpendent is preferable over a purely government central banking system. But the Fed, as is, is part of the government via its legalized monopoly status and its role as the prime facilitator of government over-spending. The benefits of Fed membership are privatized, but the risk is socialized and borne by the taxpayer. I was asking if the Fed owned any gold because virtually anything it owns was purchased with illegitimate money stolen from the people of the United States (and the world), so I wondered what the proper means would be for sorting out what portion of the Fed's gold rightfully belonged to the people. Luckily, it does not own gold, so it's not an issue.
And I agree with you, RE: Ron Paul.
Jason: The fed does own gold. You can google the fed's balance sheet, and the gold is listed as the Fed's asset, though I think the gold is officially valued at something like $42 per ounce. Legally, that gold is the fed's property, and the fed is owned by member banks. The Fed's profits, however, are paid to the treasury each year, and if the fed were to be liquidated, then any remaining assets would, with 99% probablility, be seized by the treasury.
Thanks for the correction and the added info. Much appreciated!
Below is the text of a letter from Alan Greenspan when he was chairman of the Fed. Pay attention to the third paragraph: "The Federal Reserve owns no gold". (I don't know what it's doing on their balance sheet)
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Washington, D.C. 20551 June 25, 2001
The Honorable Jim Bunning United States Senate Washington, D.C. 20510
Dear Senator:
Thank you for your recent letter requesting information related to an inquiry received from two of your constituents, Mr. and Mrs. Rupert Raymond. The Raymonds' letter principally concerns remarks made at a January 1995 meeting of the Federal Open Market Committee (FOMC) by Virgil Mattingly, in his capacity as general counsel to the FOMC. A memorandum addressed to me from Mr. Mattingly on this matter is enclosed for your information. The memorandum responds to the matter raised by the Raymonds in their letter.
I would like to take this opportunity to confirm the statements I made last year regarding the Federal Reserve and gold in a letter to one of your colleagues, Sen. Joseph Lieberman. In that letter I said:
"The Federal Reserve owns no gold and therefore could not sell or lease gold to influence its price. Likewise the Federal Reserve does not engage in financial transactions related to gold, such as trading in gold options or other derivatives. Most importantly, the Federal Reserve is in complete agreement with the proposition that any such transactions on our part, aimed at manipulating the free price of gold or otherwise interfering with the free trade of gold, would be wholly inappropriate."
These statements accurately reflect the facts and longstanding Federal Reserve policy with respect to gold.
I hope this information is helpful. Please let me know if I can be of further assistance.
Sincerely,
Alan Greenspan
Jason Dean:I was asking if the Fed owned any gold because virtually anything it owns was purchased with illegitimate money stolen from the people of the United States (and the world), so I wondered what the proper means would be for sorting out what portion of the Fed's gold rightfully belonged to the people. Luckily, it does not own gold, so it's not an issue.
I was asking if the Fed owned any gold because virtually anything it owns was purchased with illegitimate money stolen from the people of the United States (and the world), so I wondered what the proper means would be for sorting out what portion of the Fed's gold rightfully belonged to the people. Luckily, it does not own gold, so it's not an issue.
But the same goes for Treasury gold, no? Much of which was quite blatantly stolen in 1933.
JonBostwick:The Fed is not a true part of the government.Its a corporatist(fascist) entity, privately owned and mostly independent.I like Ron Paul's idea, make gold(and silver) legal tender and tax exempt. That would be a true market solution.
His platform (at least now, when he's running for the Presidency) is not to back existing US dollars with gold, but to instead allow private companies to get into the currency business.
Which I'm not sure would do anything, really, because of Gresham's Law.
Paul:But the same goes for Treasury gold, no? Much of which was quite blatantly stolen in 1933.
Yes, but there can be no doubt that what the Treasury owns belongs to "the people." For example, if the dollar were re-tied to gold, then the Treasury's gold would be used for that purpose. The Fed's gold is a little different. It is not 100% clear if the Fed's gold belongs to its member banks or to the government / the people. Someone above pointed out that the Fed pays its profits to the Treasury, so if the Fed were dismantled, he thought there was a 99% chance the gold would become property of the Treasury.
Harksaw:His platform (at least now, when he's running for the Presidency) is not to back existing US dollars with gold, but to instead allow private companies to get into the currency business. Which I'm not sure would do anything, really, because of Gresham's Law.
Gresham's Law says that bad money drives good money out of circulation. For example, when the government started producing essentially worthless dimes, the silver dimes ended up in safety-deposit boxes and dresser drawers, etc. Gresham's Law in no way applies to the legalization of monetary competition, which is what Ron Paul calls for. He isn't arguing that government produce gold coins treated on par with worthless paper money. He's advocating that private banks / mints be allowed to create non-dollar-denominated coins and notes, backed by gold (or whatever or nothing). In this sense, the U.S. dollar / Fed Note would not drive the good money out -- the U.S. dollar / Fed note itself would be driven out, but not by Gresham's Law. It would be driven out because, in the absence of the government forcing you to accept them at gunpoint, people would prefer to transact in real, commodity-backed money.