On World News Monday evening we looked at the U.S. government reaching and crashing through the $14.29 trillion debt ceiling:
The Treasury Department has taken some extreme measures to buy Congress time to negotiate an agreement in which spending is cut along with an increased debt limit. These steps include tinkering with or borrowing billions from special government funds that are used to:
* provide benefits to retired and disabled federal employees;
* stabilize the dollar or foreign currencies;
* or fund local and state securities.
Some conservatives are talking about extreme measures to reduce the deficit, such as selling off government assets like land, real estate, or even the 261.5 million ounces of gold -- mostly in Fort Knox that the Treasury department owns.
The Treasury Department values this gold at $11 billion, but that’s according to a statute saying the gold should be set at roughly $40 an ounce.
But the current market price is actually closer to $1,500 an ounce – doesn’t that mean we have $392 billion dollars in gold with which we can pay off our debt?
First of all, it’s important to consider that at the rate the nation is deficit-spending -- about $125 billion in new debt per month -- selling off all the gold the U.S. government has would only buy the nation three months of additional deficit spending.
And there are serious questions as to whether selling its gold would actually hurt the U.S.
Mary J. Miller, Assistant Secretary of the Treasury for Financial Markets, cautions that a “fire sale” of government assets “would be damaging to the economy, taxpayers, and financial markets. It would harm the interests of taxpayers, and would undermine confidence in the United States.”
Why?
It would “undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.”
Miller notes that then-Treasury Secretary James A. Baker said: “President [Reagan] and I are not prepared to take that step because it would undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system, and because the Congress clearly has the power to prevent a default by assuming its responsibility with respect to the debt limit.”
When asked whether he would consider selling the U.S.’s gold, President Reagan told his budget director, James Miller, "absolutely not."
President Clinton’s Treasury Secretary Robert E. Rubin said, “We will not sell the nation's gold supply.”
Says Miller: “The infeasibility of asset sales can be illustrated by an analogy: a family that is struggling to make its monthly mortgage payment could try to sell all of its possessions within a week at a garage sale or on the Internet. But, of course, the family would receive much less than the value of its possessions. And once the next month came, the family would still need to make its mortgage payments -- yet all of its possessions would be gone.”
-- Jake Tapper
You can follow this conversation by subscribing to the comment feed for this post.
The Treasury Department has taken some extreme measures to buy Congress time to negotiate an agreement in which spending is cut along with an increased debt limit. These steps include tinkering with or borrowing billions from special government funds that are used to:
* provide benefits to retired and disabled federal employees;
* stabilize the dollar or foreign currencies;
* or fund local and state securities.
Some conservatives are talking about extreme measures to reduce the deficit, such as selling off government assets like land, real estate, or even the 261.5 million ounces of gold -- mostly in Fort Knox that the Treasury department owns.
The Treasury Department values this gold at $11 billion, but that’s according to a statute saying the gold should be set at roughly $40 an ounce.
But the current market price is actually closer to $1,500 an ounce – doesn’t that mean we have $392 billion dollars in gold with which we can pay off our debt?
First of all, it’s important to consider that at the rate the nation is deficit-spending -- about $125 billion in new debt per month -- selling off all the gold the U.S. government has would only buy the nation three months of additional deficit spending.
And there are serious questions as to whether selling its gold would actually hurt the U.S.
Mary J. Miller, Assistant Secretary of the Treasury for Financial Markets, cautions that a “fire sale” of government assets “would be damaging to the economy, taxpayers, and financial markets. It would harm the interests of taxpayers, and would undermine confidence in the United States.”
Why?
It would “undercut confidence in the United States both here and abroad, and would be extremely destabilizing to the world financial system.”
Miller notes that then-Treasury Secretary James A. Baker said: “President [Reagan] and I are not prepared to take that step because it would undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system, and because the Congress clearly has the power to prevent a default by assuming its responsibility with respect to the debt limit.”
When asked whether he would consider selling the U.S.’s gold, President Reagan told his budget director, James Miller, "absolutely not."
President Clinton’s Treasury Secretary Robert E. Rubin said, “We will not sell the nation's gold supply.”
Says Miller: “The infeasibility of asset sales can be illustrated by an analogy: a family that is struggling to make its monthly mortgage payment could try to sell all of its possessions within a week at a garage sale or on the Internet. But, of course, the family would receive much less than the value of its possessions. And once the next month came, the family would still need to make its mortgage payments -- yet all of its possessions would be gone.”
-- Jake Tapper
You can follow this conversation by subscribing to the comment feed for this post. So...by LAW, Our Gold is $40.00 an ounce. Why is that? Because that is "real money" that must be kept in reserve to prop-up our country when all the others are struggling due to the tenets of Socialism. We are the World's Economy; no other country comes even close to our GDP, output, etc., and the other nations MAY "catch-up" someday; IF pigs fly and bears no longer "poop" in the woods. BUT: Only IF they come around to OUR WAYS!!! We do not have to buy from OPEC; we have more reserves than they do. What would they do if we just quit buying their Oil? There would be 200 million Arabs starving to death. What if we quit buying China's goods? There would be 300 million unemployed people. They know how to survive without US because the people have endured for centuries and they eat everything, including Fido and Feefee, Lassie, Rin Tin Tin, as well as Cheeta and King Kong. I agree: Obama is not the right guy for the job; his instincts are very poor and his logic is skewered toward "...Hope, and Change," and Socialist Idealism because of his background. His concerns are childish and biased and his leadership skills flawed. BHO, he gotta go!!! Soon.
Posted by: CT Sherwin | May 18, 2011 12:51:42 PM
Miller: "The infeasibility of asset sales can be illustrated by an analogy: a family that is struggling to make its monthly mortgage payment could try to sell all of its possessions within a week at a garage sale or on the Internet. But, of course, the family would receive much less than the value of its possessions. And once the next month came, the family would still need to make its mortgage payments -- yet all of its possessions would be gone."
The infeasibility of increased spending can be illustrated by an analogy too: A family (Obama and the Democrat party) has purchased several homes they knew they'd have trouble paying the debt on in the near future, and now, the bank (Congress) is threatening to foreclose (enforce the debt limit) because the family is near a point where their income (tax revenues) can no longer pay the interest on the debt owed, let alone the debt itself. Rather than live within its means (cut spending), the family plans to steal from its hard-working neighbors (tax increase) to fund its extravagant, wasteful life-style.
That's one analogy that the liberals in Washington are either too stupid or too greedy to understand. 2012 can't come soon enough!
The infeasibility of increased spending can be illustrated by an analogy too: A family (Obama and the Democrat party) has purchased several homes they knew they'd have trouble paying the debt on in the near future, and now, the bank (Congress) is threatening to foreclose (enforce the debt limit) because the family is near a point where their income (tax revenues) can no longer pay the interest on the debt owed, let alone the debt itself. Rather than live within its means (cut spending), the family plans to steal from its hard-working neighbors (tax increase) to fund its extravagant, wasteful life-style.
That's one analogy that the liberals in Washington are either too stupid or too greedy to understand. 2012 can't come soon enough!
Posted by: Anonymous | May 18, 2011 12:49:47 PM
Quit trying to educate the Management Trainee in the Oval Office...we don't have time for on-the-job training...we have a problem, folks, that requires s serious two step approach:
1. Get serious..and I do mean,"serious" about our free spending ways....budget every damned year. and review the results of that budgeting at the end of every damned month....it's gotta start somewhere.....and no robbing Peter to pay Paul.
2. BUDGET YOUR DEBT PAYMENTS while you are at it.....and enough of the freewheeling "what'a a billion or two" prevalent in Washington.
3. Below any flying American flag, fly a banner which will read simply PAY AS YOU GO.
1. Get serious..and I do mean,"serious" about our free spending ways....budget every damned year. and review the results of that budgeting at the end of every damned month....it's gotta start somewhere.....and no robbing Peter to pay Paul.
2. BUDGET YOUR DEBT PAYMENTS while you are at it.....and enough of the freewheeling "what'a a billion or two" prevalent in Washington.
3. Below any flying American flag, fly a banner which will read simply PAY AS YOU GO.
Posted by: justj joey | May 18, 2011 10:50:42 AM
Yet most of you offer no solution to OPEC's control over the USA at all except to seriously suggest expensive drilling in difficult areas for what will ultimately result in only marginal amounts of domestic oil at best...."
Are you sure? Maybe we could ask Brazil for help.
Are you sure? Maybe we could ask Brazil for help.
Posted by: George | May 18, 2011 9:58:32 AM
"I'm much more worried about the Republicans regaining power so they can turn control of the government back over to big business who can then gamble with our financial futures, strip away government protections for safety and the environment, dismantle our social safety nets, so working class Americans can live and work like their ideal of model citizens, the Chinese, instead of just borrowing money from them till we reduce unemployment."
Jeffery Immelt is working on this as we speak.
Jeffery Immelt is working on this as we speak.
Posted by: Generally Eclectic | May 18, 2011 9:56:48 AM
Maybe they should do what working people do every day live within their means. Sometimes have to cut back. I know thats impossible for dems or reps.
Posted by: daniel | May 18, 2011 9:41:01 AM
President Obama is like a small spoiled child, he just ignores everything that is happening and hopes someone else will fix it so he will not be blamed. We waste so much money on so called renewable fuel. I'll go for it when I see the President fly off on windmill or solar power. We are a nation of oil and gas energy.
Posted by: Freedom | May 18, 2011 9:23:21 AM
"back over to big business"
Helllo Skip!! Open your eyes. This is the first tenant of crony capitalism. Bush made it mainstream, and Obama has put it into high gear. Obama is Bush III, and Wall Street and the insurance and energy industries (and the bailed out automakers) love him. Well, until his promises expire and he needs to up the poll numbers. But any "tough talk" against business will also expire with a campaign contribution.
Helllo Skip!! Open your eyes. This is the first tenant of crony capitalism. Bush made it mainstream, and Obama has put it into high gear. Obama is Bush III, and Wall Street and the insurance and energy industries (and the bailed out automakers) love him. Well, until his promises expire and he needs to up the poll numbers. But any "tough talk" against business will also expire with a campaign contribution.
Posted by: dave | May 18, 2011 5:02:21 AM
Skip, "Yet most of you offer no solution to OPEC's control over the USA" but until the Obama regime all of our wars were "over oil" and hence, attempt to reign in OPEC! Funny now that Obama continues, and indeed, starts new wars in the region it is no longer about oil!
Frankly I'd much rather go to war "over oil" than mealy-mouthed reasons to protect Obama's co-religionists! But, of course, we should end these stupid wars and attempt to control OPEC by other means. We should, instead, simply buy their oil and let the backwards Moslems deal with their own. Blockade, seize assets, and strategically attack those countries who pose a threat. In the mean time exploit the reserves (oil, natural gas, coal, nuclear, etc) in the US and in friendly countries. Cut the taxes on same industries as well as the crazed blends and regional requirements on diesel and gasoline. And cut the sweet-heart deals and subsidies on "green" and let them develop if they are profitable.
Frankly I'd much rather go to war "over oil" than mealy-mouthed reasons to protect Obama's co-religionists! But, of course, we should end these stupid wars and attempt to control OPEC by other means. We should, instead, simply buy their oil and let the backwards Moslems deal with their own. Blockade, seize assets, and strategically attack those countries who pose a threat. In the mean time exploit the reserves (oil, natural gas, coal, nuclear, etc) in the US and in friendly countries. Cut the taxes on same industries as well as the crazed blends and regional requirements on diesel and gasoline. And cut the sweet-heart deals and subsidies on "green" and let them develop if they are profitable.
Posted by: Ed | May 18, 2011 12:30:43 AM
that is tying foreign interests into control over the USA
+++++++++++++++++++
Yet most of you offer no solution to OPEC's control over the USA at all except to seriously suggest expensive drilling in difficult areas for what will ultimately result in only marginal amounts of domestic oil at best, and even though the public wants investment in development and research into alternative energy.
+++++++++++++++++++
Yet most of you offer no solution to OPEC's control over the USA at all except to seriously suggest expensive drilling in difficult areas for what will ultimately result in only marginal amounts of domestic oil at best, and even though the public wants investment in development and research into alternative energy.
Posted by: Skip | May 18, 2011 12:13:30 AM
I'm much more worried about the Republicans regaining power so they can turn control of the government back over to big business who can then gamble with our financial futures, strip away government protections for safety and the environment, dismantle our social safety nets, so working class Americans can live and work like their ideal of model citizens, the Chinese, instead of just borrowing money from them till we reduce unemployment.
Posted by: Skip | May 17, 2011 11:46:21 PM
Skip, the primary philosophy of the mainstream "liberals" (not in the classical sense) is debt. That is the Keynesian model!! To deny that is crazy.
Now whether it works is another matter...it could also be argued that the debt, particularly in the Obama socialist model, has an ancillary value and that is tying foreign interests into control over the USA and to also encroach more power over people/businesses to the Federal government (and their ultimate owners the internationalist types and bankers.)
Now whether it works is another matter...it could also be argued that the debt, particularly in the Obama socialist model, has an ancillary value and that is tying foreign interests into control over the USA and to also encroach more power over people/businesses to the Federal government (and their ultimate owners the internationalist types and bankers.)
Posted by: Ed | May 17, 2011 11:31:12 PM
It's simply a major element of the right-wing debt scare that we are going to have trouble borrowing more money when there is little evidence as usual to back up the claim. That is not meant to be an endorsement of debt itself.
Posted by: Skip | May 17, 2011 11:07:18 PM
Looks like it is time to lay off our Congress Critters and other non-essential staff members and put the President on a strict budget. No more Csars, no more flying on Air Force One unless truly necessary.
Posted by: Revere | May 17, 2011 10:52:15 PM
Skip "[Apparently plenty of people, as there is still no shortage of buyers for US debt despite desperate right-wing hopes.]"
- if not wanting to be in debt is a "right-wing hope", then call me a "right-winger"! Wow, it is crazy that you, and Obama, would WANT to be owned by a foreign country, bank, sovereign investment fund, or ruled by your debt!
There are two main reason why the foreigners you love are buying our debt 1) because other countries are in, but further along, in the same economic collapse and are grasping at retaining any chance of value
and
2) countries, like China, want to own us so they can do what they want vis-a-vis Taiwan, Africa, etc.
- if not wanting to be in debt is a "right-wing hope", then call me a "right-winger"! Wow, it is crazy that you, and Obama, would WANT to be owned by a foreign country, bank, sovereign investment fund, or ruled by your debt!
There are two main reason why the foreigners you love are buying our debt 1) because other countries are in, but further along, in the same economic collapse and are grasping at retaining any chance of value
and
2) countries, like China, want to own us so they can do what they want vis-a-vis Taiwan, Africa, etc.
Posted by: Ed | May 17, 2011 10:45:22 PM
Jeffery....would you say that the Obama administration is anti-business?
Posted by: Skip | May 17, 2011 10:25:14 PM
the full faith and credit of the USA. How many around the world, and at home, have trust in that under this regime?
+++++++++++++++++++
Apparently plenty of people, as there is still no shortage of buyers for US debt despite desperate right-wing hopes.
+++++++++++++++++++
Apparently plenty of people, as there is still no shortage of buyers for US debt despite desperate right-wing hopes.
Posted by: Skip | May 17, 2011 10:24:28 PM
Obamasquander continues......with or without any actual cash.
Posted by: Rick McDaniel | May 17, 2011 10:06:17 PM
"Can anyone explain why we should not use this money to pay down the debt?"
The same reason why GE can't be taxed.
The same reason why GE can't be taxed.
Posted by: Jeffrey | May 17, 2011 7:36:56 PM
there hasn't been gold in Fort Knox for quite some time now, or at least that has been the rumor for a decade or more.
And the only backing for the US Dollar, besides it being the method of exchange for petroleum, is fiat: the full faith and credit of the USA. How many around the world, and at home, have trust in that under this regime?
And the only backing for the US Dollar, besides it being the method of exchange for petroleum, is fiat: the full faith and credit of the USA. How many around the world, and at home, have trust in that under this regime?
Posted by: Ed | May 17, 2011 7:30:58 PM
How's those Budget Cuts coming along President Obama?
Posted by: Noz | May 17, 2011 7:19:25 PM
Democrats want to cut around $2 billion a year in tax subsidies for the five companies – Shell, Chevron, BP, ExxonMobil, and ConocoPhillips – and use the savings to pay down the federal deficit.
The Republicans in Congress say no - along with several Democrats in oil producing states.
Can anyone explain why we should not use this money to pay down the debt? In light of the massive profits these companies are seeing, I don't understand why they need continued tax subsidies - especially when our nation CLEARLY needs to use the revenue elsewhere.
The Republicans in Congress say no - along with several Democrats in oil producing states.
Can anyone explain why we should not use this money to pay down the debt? In light of the massive profits these companies are seeing, I don't understand why they need continued tax subsidies - especially when our nation CLEARLY needs to use the revenue elsewhere.
Posted by: green.goddess | May 17, 2011 7:06:55 PM
Will they have to raise it again next week?
Posted by: LongT | May 17, 2011 6:03:18 PM
When asked whether he would consider selling the U.S.’s gold, President Reagan told his budget director, James Miller, "absolutely not."
President Clinton’s Treasury Secretary Robert E. Rubin said, “We will not sell the nation's gold supply.”
Miller notes that then-Treasury Secretary James A. Baker said: “President [Reagan] and I are not prepared to take that step because it would undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system, and because the Congress clearly has the power to prevent a default by assuming its responsibility with respect to the debt limit.”
So gold is the foundation or not?
President Clinton’s Treasury Secretary Robert E. Rubin said, “We will not sell the nation's gold supply.”
Miller notes that then-Treasury Secretary James A. Baker said: “President [Reagan] and I are not prepared to take that step because it would undercut confidence here and abroad based on the widespread belief that the gold reserve is the foundation of our financial system, and because the Congress clearly has the power to prevent a default by assuming its responsibility with respect to the debt limit.”
So gold is the foundation or not?
