Paul: 'Sell the Gold in Ft. Knox'
by Gary North: Building
Your Financial Storm Shelter
Ask a gold
bug if he thinks that Franklin Roosevelt did the right thing in
1933 when he unilaterally confiscated the gold coins of all Americans.
He will tell you "no." Why not? "Because it was a
violation of property rights. The Federal government had no legal
authority to do this."
But the Supreme
Court authorized it, 5 to 4. The gold bug will tell you that the
Supreme Court cannot be trusted.
almost 70 years. Ron
Paul announces at the Heritage Foundation that the government
should sell its gold to reduce the national debt.
No one comes
to his defense.
the Treasury Department got one of its staffers to write a critique.
The government should sell no assets, she insists. Congress must
raise the debt ceiling. There are not enough assets to sell. She
ridiculed the suggestion of a
balanced budget through asset sales. With a deficit of $125
billion a month, she said, a fire sale would do no good.
she admitted that gold is central to the perception if the U.S.
government as solvent.
sale" of the Nation's gold to meet payment obligations would
undercut confidence in the United States both here and abroad,
and would be extremely destabilizing to the world financial system.
Secretaries from both parties have made it clear that they would
not sell gold in order to buy time in a debt limit impasse. As
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 President Reagan was asked whether he would consider selling
gold, he told his Budget Director, James Miller, "absolutely
not." Similarly, Treasury Secretary Robert E. Rubin said,
"We will not sell the nation's gold supply."
In short, gold
is not a barbarous relic. Gold in the vault at Fort Knox and
in the Federal Reserve Bank of New York (a private corporation)
is basic to the world's confidence.
But what about
gold in the hands of Americans? She did not say. The Treasury has
had contempt for that idea ever since 1933.
That a salaried
government bureaucrat would oppose the sale is understandable. But
equally incensed are gold bugs. Only one came to his defense: the
#1 scholar of the American gold standard, Dr. Edwin Vieira, author
of Pieces of Eight, a 1600-page history of the gold standard
in America. "Redeemable currency is an oxymoron." The
government has no plans to restore a gold standard of any kind.
"They don't need the gold. They've just been sitting on it
since Roosevelt stole it."
was critical of Paul's suggestion to restore gold to the private
on here? If it was immoral and illegal for the government to confiscate
the gold at $20 an ounce in 1933, why is it a bad idea for the government
to sell back the gold to the public at a market price today?
We see once
again that people who say they believe that gold is the basis of
freedom do not believe it. They believe in the United States government.
They believe that the government has the right to hang onto its
stolen gold. Why? Because the government will someday establish
a gold standard. The gold belongs to the government.
what is a gold standard? It is a system in which the government
buys and sells gold at a fixed price. We have not had that system
since 1933. The government did make the promise to foreign governments
and central banks, but Nixon unilaterally broke the promise on August
The gold bugs
have now converted to Franklin Roosevelt's idea of a gold standard:
a system in which the government has the right to steal property
at one price, hike the price later, and sit on the wealth. The gold
bugs honestly trust the Federal government to restore a gold standard
someday. There has not been one since since 1933 that any government
on earth will do this, but somehow, the gold bugs believe, it will
do it in the future.
the rest of the article
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
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