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The Great Gold Sell Off? Will we pay off our debt by selling Ft. Knox Gold!

Selling Gold at Fort Knox Emerges as Next Big Question in Debate on Federal Debt Limit
Congressman Paul Endorses the Idea, Amid Showdown Between Congress, Administration

By DAVID PIETRUSZA, Special to the Sun | May 17, 2011

NEW YORK — The next big question on the federal debt limit could be whether to start selling the government’s holdings of gold at Fort Knox — and at least one presidential contender, Ron Paul, has told The New York Sun he thinks it would be a good move.

The question has been ricocheting around the policy circles today. An analyst at the Heritage Foundation, Ron Utt, told the Washington Post that the gold holdings of the government are “just sort of sitting there.” He added: “Given the high price it is now, and the tremendous debt problem we now have, by all means, sell at the peak.”

His comment came in the wake of not only the government having reached the statutory debt limit of $14.29 trillion but also the release of a report by the Heritage Foundation of a report on asset sales. The report outlined how a “partial sales of federal properties, real estate, mineral rights, the electromagnetic spectrum, and energy-generation facilities” might garner the federal treasury $260 billion over the course of the next 15 years.

The report did not mention the possibility of selling the government’s holding of 147 million ounces of bullion, which at recent prices of $1,500 an ounce, would be worth about $370 billion. But the possibility has not been lost in the policy debate now raging in Washington. The Wall Street Journal reported Monday that a group of Republican congressmen supports the idea of selling gold.

PART 2

Officials of the Obama administration have taken notice — and disagree. The assistant Treasury secretary for financial markets, Mary Miller, wrote in a posting on the Treasury Department’s Website May 6 that “fire sale” of the government’s financial assets, including gold, would not be a “viable option.” She urged instead a raising of the debt limit.

An unnamed senior administration official was quoted by the Washington Post as saying, “Selling off the gold is just one level of crazy away from selling Mount Rushmore.” The Wall Street Journal, in its dispatch Monday, reported that Treasury “could be forced to rethink” their opposition if the budget talks fail.

A study of gold reserve sales in the late 1990s noted that seven nations — Australia, Austria, Belgium, the Netherlands, Portugal, and Sweden — had then recently sold off substantial portions of their gold reserves. The sales, which amounted to 48% of those reserves, presaged a 26% devaluation in their nation’s respective currencies. Between 1999 and 2002, in 17 separate auctions, Britain sold off half of its gold reserve, netting $3.5 billion. What Britain sold is now worth $10.5 billion.

In September 2009 the International Monetary Fund authorized sales from its gold reserves. At the conclusion of its sales, the IMF had disposed of 403.3 tons of gold or 13% of reserves. Over half was purchased by the central banks of India, Sri Lanka, Mauritius, and Bangladesh. In early 2011, Communist China announced plans to increase its gold reserves from to 10,000 tons by decade’s end from the 1,200 tons it currently holds. Mexico has acquired 93.3 tons of gold this year, while Thailand added 9.3 tons to its national reserves this March. Russia added 22.5 tons in January and February.

In August 2010, a leading figure in the monetary debate in Congress, Ron Paul, a Republican of Texas, called for an audit of the federal government’s gold reserves. “If there was no question, you’d think they would be very anxious to prove to us that the gold is there. . . . ,” Dr. Paul then said, “In the early 1980s when I was on the gold commission, I asked them to recommend to the Congress that they audit the gold reserves – we had 17 members of the commission and 15 voted not to the audit. I think there was only one decent audit done 50 years ago.”

“If we ever get around to deciding we should use gold in relationship to our currency we ought to know how much is there,” Dr. Paul added, “Our Federal Reserve admits to nothing and they should prove all the gold is there. There is a reason to be suspicious and even if you are not suspicious why wouldn’t you have an audit?” In March 2008 the Times of London quoted a spokesman of the American treasury as saying that American gold holdings “are audited every year by the Department of Treasury’s Office of Inspector General. He confirmed that although independent auditors oversee the process they are not given access to the Fort Knox vault.”

Dr. Paul told the Sun today that he reckoned the sale of gold reserves would be “a good and moral decision. An individual would have to do the same.” The sentiment is echoed by another big name in the debate on monetary reform, Edwin Vieira Jr., who told the Sun he has little hope of the government moving to sound money and would prefer that it coin its gold holdings in pieces marked with their weight and use them to pay off debts, particularly individuals — who might be owed, say, tax refunds.

Mr. Vieira is a proponent of what he calls the “absolute separation between currency and debt.” He considers specified weights of gold and silver as the only constitutional currency. “Redeemable currency,” he says, “is an oxymoron.” And given that America is in an era of fiat money with no plans on the government’s part to mount a reform, he says of the government: “They don’t need the gold. They’ve just been sitting on it since Roosevelt stole it.”

However, one of the most famous advocates of the gold standard, Lewis Lehrman, opposes the sale of the gold holdings of the American government — or any part of them. “Under no circumstances should the United States consider selling a single ounce of gold,” Mr. Lehrman, who runs the internet project TheGoldStandardNow.org, told the Sun. “On the contrary, depending upon the facts and circumstances and the level of prices, the United States might be a gradual buyer.

Mr. Lehrman, who had served in the early 1980s with Dr. Paul as a member of the United States Gold Commission, had just been this afternoon interviewed by Diane Rehm of National Public Radio, on which he called for American leadership in restoring a gold standard. He did not suggest that it could be done immediately, but he argued that this is the time to start, saying: “We have all the grounding and the basis for the United States taking the lead in establishing the convertibility of the dollar today.”

http://www.nysun.com/national/selling-gold-at-fort-knox-emerges-as-next-big/87350/

G Edward Griffin on Glenn Beck – END THE FED

The Creature from Jekyll Island – The History of the Fed

Creation of First and Second Central Bank

The first U.S. institution with central banking responsibilities was the First Bank of the United States, chartered by Congress and signed into law by President George Washington on February 25, 1791 at the urging of Alexander Hamilton. This was done despite strong opposition from Thomas Jefferson and James Madison, among numerous others. The charter was for twenty years and expired in 1811 under President Madison, because Congress refused to renew it.

In 1816, however, Madison revived it in the form of the Second Bank of the United States. Years later, early renewal of the bank’s charter became the primary issue in the reelection of President Andrew Jackson. After Jackson, who was opposed to the central bank, was reelected, he pulled the government’s funds out of the bank. Nicholas Biddle, President of the Second Bank of the United States, responded by contracting the money supply to pressure Jackson to renew the bank’s charter forcing the country into a recession, which the bank blamed on Jackson’s policies. Interestingly, Jackson is the only President to completely pay off the national debt. The bank’s charter was not renewed in 1836. From 1837 to 1862, in the Free Banking Era there was no formal central bank. From 1862 to 1913, a system of national banks was instituted by the 1863 National Banking Act. A series of bank panics, in 1873, 1893, and 1907, provided strong demand for the creation of a centralized banking system.

Creation of Third Central Bank
History of the Federal Reserve System

The main motivation for the third central banking system came from the Panic of 1907, which caused renewed demands for banking and currency reform. During the last quarter of the 19th century and the beginning of the 20th century the United States economy went through a series of financial panics. According to many economists, the previous national banking system had two main weaknesses: an inelastic currency and a lack of liquidity.In 1908, Congress enacted the Aldrich-Vreeland Act, which provided for an emergency currency and established the National Monetary Commission to study banking and currency reform. The National Monetary Commission returned with recommendations which later became the basis of the Federal Reserve Act, passed in 1913.

Federal Reserve Act
Newspaper clipping, December 24, 1913

The head of the bipartisan National Monetary Commission was financial expert and Senate Republican leader Nelson Aldrich. Aldrich set up two commissions—one to study the American monetary system in depth and the other, headed by Aldrich himself, to study the European central banking systems and report on them.[27] Aldrich went to Europe opposed to centralized banking, but after viewing Germany’s monetary system he came away believing that a centralized bank was better than the government-issued bond system that he had previously supported.

In early November 1910, Aldrich met with five well known members of the New York banking community to devise a central banking bill. Paul Warburg, an attendee of the meeting and long time advocate of central banking in the U.S., later wrote that Aldrich was “bewildered at all that he had absorbed abroad and he was faced with the difficult task of writing a highly technical bill while being harassed by the daily grind of his parliamentary duties.” After ten days of deliberation, the bill, which would later be referred to as the “Aldrich Plan”, was agreed upon. It had several key components including: a central bank with a Washington-based headquarters and fifteen branches located throughout the U.S. in geographically strategic locations, and a uniform elastic currency based on gold and commercial paper. Aldrich believed a central banking system with no political involvement was best, but was convinced by Warburg that a plan with no public control was not politically feasible. The compromise involved representation of the public sector on the Board of Directors.

Aldrich’s bill was met with much opposition from politicians. Critics were suspicious of a central bank, and charged Aldrich of being biased due to his close ties to wealthy bankers such as J. P. Morgan and John D. Rockefeller, Jr., Aldrich’s son-in-law. Most Republicans favored the Aldrich Plan, but it lacked enough support in Congress to pass because rural and western states viewed it as favoring the “eastern establishment”. In contrast, progressive Democrats favored a reserve system owned and operated by the government; they believed that public ownership of the central bank would end Wall Street’s control of the American currency supply. Conservative Democrats fought for a privately owned, yet decentralized, reserve system, which would still be free of Wall Street’s control.

The original Aldrich Plan was dealt a fatal blow in 1912, when Democrats won the White House and Congress. Nonetheless, President Woodrow Wilson believed that the Aldrich plan would suffice with a few modifications. The plan became the basis for the Federal Reserve Act, which was proposed by Senator Robert Owen in May 1913. The primary difference between the two bills was the transfer of control of the Board of Directors (called the Federal Open Market Committee in the Federal Reserve Act) to the government. The bill passed Congress in late 1913 on a mostly partisan basis, with most Democrats voting “yea” and most Republicans voting “nay”.

http://en.wikipedia.org/wiki/Federal_Reserve_System