You Can’t Trust the Government With Your Money: Part I
An article in Politico sparked an old memory.
With gold making new highs in our world of unpayable government debt, the mainstream press is starting to notice. Politico asks, “Can the United States be trusted with Germany’s gold?”
Our answer is a definitive NO! Governments cannot be trusted to manage money and currencies honestly for long. We’ll get to that.
Just as informed Americans want Fort Knox to be audited, some German officials are starting to ask if they should be demanding audits of Germany’s gold. And that includes auditing German gold stored with the Federal Reserve in the US.
Politico:
Germany holds the world’s second-largest gold reserves and keeps 37 percent of them — some 1,236 metric tons, worth €113 billion — in the vaults of the New York Federal Reserve. Those holdings of precious metal guarantee that, should the need ever arise, the Bundesbank has access to something it can change into U.S. dollars (or any other hard currency).
The head of Germany’s central bank, the Deutsche Bundesbank, responded to the concerns about the nation’s gold with the usual: You people keep moving. There’s nothing to see here.
This is what he said:
“We have a trustworthy and reliable partner in the Fed in New York for the storage of our gold holdings,” said Bundesbank President Joachim Nagel during a February press conference, a comment that the bank directed POLITICO back to on Friday. “It does not keep me awake at night. I have complete confidence in our colleagues at the American central bank.”
Right.
In 2013 Germany decided to recall 374 tons of gold from the Banque de France in Paris and 300 tons from the Federal Reserve Bank in New York. It took four and a half years to repatriate German gold from both places. Four and a half years! Why so long? And how much longer would it take in a monetary crisis? Or in a war?
Today, Germany has possession of half of its gold. 37 percent of Germany’s gold, 1,236 tons, remains in storage with the Federal Reserve. 13 percent is stored at the Bank of England.
Over the long arc of history, we conclude that government should not be in charge of monetary systems. Governments are congenitally incapable of managing currencies honestly. If our own currency were honestly managed, the US dollar wouldn’t have lost 97 percent of its purchasing power under the Federal Reserve. Washington wouldn’t have stolen the people’s gold in 1933.
In Part II of this commentary, we suggest that Germany wondering if its gold in foreign hands is safe is merely one more symptom of a much larger loss of faith in government money, including the US dollar. It is a concern you should share. Gold is in motion around the world. Central banks have purchased a thousand tons of gold a year for the last three years. And gold is being shipped to the US and other destinations at an unprecedented pace.
