In November’s new issue of The Atlantic, James Picerno poses the question of why, given such lean times, “is $300 billion worth of government treasure simply sitting in vaults?” He’s referring to the US stash of gold reserves. Although there are a number of good reasons for the status, it’s interesting to consider what reasons the federal government is willing to offer publicly.
From The Atlantic:
“Getting straight answers (or any answers at all) from Washington about our hoard of gold is weirdly difficult. Yes, the government can downsize its holdings, said Congressman Brad Sherman, a member of the Subcommittee on Domestic Monetary Policy and Technology, through a spokesman. No, it’s not a good idea, he added, offering no elaboration. When I called to interview the subcommittee’s chairman, Representative Mel Watt, his office begged off in an e-mail, advising only that he ‘hadn’t studied this particular issue as of yet.’
“Repeated calls and e-mails to the White House press office went unanswered. The Treasury Department referred me to the section on gold in the U.S. Code. When I pressed for more information, a public-affairs official e-mailed back: ‘Gold? Don’t you have anything better to write about[?]‘
“…Under current law, income from the sale of gold must be used to reduce the national debt. But nothing would stop Congress from rewriting the regulation to permit other uses. By Washington’s corpulent spending standards, $300 billion may seem modest, but it’s hardly trivial: it could, for example, reduce our $1.3 trillion budget deficit by more than 20 percent; finance Social Security for nearly six months; or fund unemployment benefits for several years—in effect, create a stimulus package without pushing us further into debt.”
It seems rather obvious the last thing the feds would do is spend the cash on paying down the national debt while failing to consider any austerity measures. Instead, the recommendations above for simply spending gold – especially rather than cutting expenses — are of dubious value. Alongside the US military, the gold reserve is probably one of the nation’s not-yet diminishing assets that still insulate the US’ dwindling credibility as home of the world’s reserve currency.
You can read the full details in The Atlantic’s coverage of Uncle Sam’s mysterious hoard.
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