Even though the Federal Debt will more than likely never be paid down, is it true that the Federal Reserve holds our gold because the Federal government is borrowing so much from its creditors?
I read somewhere the Federal Reserve holds gold as collateral for our debt, or something like that, but I'm not really sure what that means.
Gold is part of the balance of assets held by the Fed against the money in circulation. However, as the Fed's books are closed, no one knows really how much of what assets is held against what. This is why Ron Paul introduces the bill to audit the Fed every year. Generally, no collateral is held against foreign debts, but if it were, it is the lender who holds the collateral and not the borrower.
We do not need to payoff the Federal debt with future Labor or Investment dollars..not even taxes. What we need is more gold prospectors, even the weekend warriors would make worthy contributions. Geologists seem agreed that within the U.S. borders only 3% of the estimated and recoverable gold has been found. Gold detection machines produced today are 100's of times more powerful..and are being improved yearly. One could recoup the cost of the most expensive model (approx. $4500) in very few excursion, with some reasonable research.
No the US Government could default or threaten to default (Basically declare bankruptcy) and force the creditors to accept worse terms. In the nutso Fed fueled finance system on the verge of bankruptcy their lingo is "restructure" the debt.
I am amazed that other countries buy USG debts at all. The largest bond mutual fund refuses to do so and the economic theory of Mercantilism has proven time and time again to be a long term failure.
As for bankruptcy, that would be the better solution than the current one which is keep creating inflation at a greater rate than the CPI (The CPI is just an outright lie) and then tell the pensioners, anti-Social anti-Security receipients, medicare receipients and the like that they aren't losing purchasing power.
On this topic, from LRC a week ago: