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To: LindyBill who wrote (524398)11/24/2012 7:23:46 PM
From: Sr K  Respond to of 794015
 
LETTERS | November 22, 2012, 11:02 a.m. ET

Treasury Owns the U.S. Gold Reserve

In regard to John F. Prusiecki's Nov. 9 letter "Deleveraging the Fed With a Golden Plan": Reasonable people apparently still believe that the Federal Reserve can escape the eventual accounting consequences of its quantitative easings (total assets now worth about $2.832 trillion versus capital of $54.8 billion) simply by marking up the value of the U.S. gold reserve GRZ.V -3.47% from the official price of $42.22 per ounce to current market value.

The gold reserve is about 261.5 million ounces, and the total spot market value is $453.5 billion. At the official price, however, the reserve is worth about $11.041 billion. Such a markup would create a bookkeeping profit of about $442 billion and would reduce the Fed's leverage ratio to a more acceptable level (about 6 to 1) from the current level of about 52 to 1. Unfortunately for this line of argument, the Gold Reserve Act of Jan. 30, 1934, transferred legal title to the Fed's former gold holdings to the Treasury.

That fact cuts off the Fed's bookkeeping escape route by using the gold reserve. To pay for the 1934 gold transfer, the Treasury issued non-transferable gold certificates to the Fed. But now, if the Treasury sold all its gold holdings, for example, it could satisfy its obligations under current law by tendering about $11.041 billion to the Fed and keeping the remaining $442 billion for itself. That is because, under the gold-clause cases that the U.S. Supreme Court decided in the 1930s, the Fed would be barred from claiming more than $11.041 billion (the official price value of 261.5 million ounces) from the Treasury. Congress would have to appropriate any additional transfer of gold or dollars to the Fed.

I am a former Federal Reserve Bank attorney and I have no current authority to speak for the Federal Reserve System or the Treasury. Still, I doubt that the current general counsel of either the board of governors or the Treasury would disagree in public with the conclusions stated here about who really owns the U.S. gold reserve. I think it is the Treasury Department, not the Federal Reserve.

Walker F. Todd

Research Fellow

American Institute for Economic Research

Chagrin Falls, Ohio

A version of this article appeared November 23, 2012, on page A14 in the U.S. edition of The Wall Street Journal, with the headline: Treasury Owns the U.S. Gold Reserve.

7 Comments



To: LindyBill who wrote (524398)11/24/2012 11:04:51 PM
From: Neeka17 Recommendations  Read Replies (1) | Respond to of 794015
 
Doom and gloom seems to be what this thread is all about. The articles you post about what is happening in the EU are doom and gloom. The articles you post about what is happening in the ME are mostly doom and gloom. I don't know where you draw the line. You need to be more specific.



To: LindyBill who wrote (524398)11/24/2012 11:19:44 PM
From: Elroy15 Recommendations  Read Replies (1) | Respond to of 794015
 

I am not going to get up every morning and read a thread full of posts whining and complaining about the end of the world approaching.


My wife ran away with my best friend and I miss him.



To: LindyBill who wrote (524398)11/28/2012 1:18:39 PM
From: KLP23 Recommendations  Read Replies (2) | Respond to of 794015
 
To Bill and All who have enjoyed being here on PfP…..



Had to give LindyBill’s Nov 24th edict some thought overnight. Bill has for some time expressed his original intent of this thread, but I think that, even though we heard him, we wanted to believe that he too enjoyed the multi-faceted info so many of us brought to the table. For many of us who have posted here for more than 10 years, it is a hard blow, as we’ve come to love the feeling of community and yes, trust, of our fellow posters.

We have grown in knowledge on several sides of issues, and most always, even if we disagreed with various issues, remained as friends do, friends. We came, not only to see the current news, or just the digestion of that news as viewed by some of the notable opinion makers of our day, but also to voice our own opinions and sideline comments.



Bill has given me so much knowledge, and yes, fun.... (I can only speak for me) but I honestly believe that so many of us feel now alone with our thoughts. Yes, there are many other threads we can go to, but really, is that going to be the same?



The answer, as far as I’m concerned, is No, it won’t be. The only thing that will be somewhat the same is to copy, as best as we are able, what LB allowed Politics for Pros to become over the years.



I know that all of us want to congratulate LindyBill on this thread, for being one of the highest read and enjoyed threads on all of SI. I feel sure I can say that we have all greatly enriched our lives by reading and participating here. Many of us will continue voicing our thoughts here, if we feel we have something to say about the particular subject. But what we won’t have is the old fashioned “Salon Feeling” *** that apparently the Victorians so enjoyed in individual homes as entertainment and enlightenment so many years ago.



If some bright, engaging person here could and would create and moderate a new “Politics for Pros Too” I feel certain that the new home would not only allow us freedom of thought and voice, but would also give all of us opportunity to find multi-sources of so called “professional opinion” for all to experience and enjoy. If some want only the news as listed in any of the various sources today, a this new thread wouldn’t be the one for them. Moderating a large and well received thread is a labor of love, because of the time commitment. Dealing with the issue of children, bashers and trolls is unfortunately part of the deal. But hopefully someone will be very brave and step up to this plate …..



Perhaps LindyBill would come to share his knowledge and expertise on this new thread as he was able, after keeping up with his own health and life, plus managing several other important threads here on SI.



Bill, I too wish you much success with your original endeavor here with Politics for Pros. You have provided so much for so many of us, and I too, Thank You!





***

The term drawing room is not used as widely as it once was, and tends to be used in Britain only by those who also have other reception rooms, such as a morning room, a nineteenth-century designation for a sitting-room, often with east-facing exposure, suited for daytime calls, or the middle-class lounge, a late nineteenth-century designation for a room in which to relax; hence the drawing room is the smartest room in the house, usually used by the adults of the family when entertaining. This term is still widely used in India and Pakistan, probably since the colonial days, in the larger urban houses of the cities where there are many rooms.



The term parlour initially designated the more modest reception rooms of the middle classes, but usage changed in the UK as homeowners sought to identify with the grander homes of the wealthy. Parlor remained the common usage in North America into the 20th century. In French usage the word salon, previously designating a state room, began to be used for a drawing room in the early part of the 19th century, reflecting the salon social gatherings that had become popular in the preceding decades.

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

Also, Age of Elegance….

http://www.erasofelegance.com/history/victorianarts.html