We address idea of the taking a trillion dollars created out of thin air by the Federal Reserve by repricing the gold certificate on their books and immediately putting it in the Social Security trust fund.
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There have been all kinds of proposals about the Social Security trust fund: changing the payout ratios, changing the age limits, redefining payment streams.
One of the ones that came out over the weekend was written up about taking the gold certificate in on the books of the Federal Reserve and repricing it to the market price and taking the trillion dollars that would be created out of thin air by the Federal Reserve on such a transaction and immediately putting the trillion dollars in the Social Security trust fund.
The idea here is, out of thin air, you create a trillion dollars by repricing the gold certificate. I agree with repricing. I don’t agree with the purpose to fund the Social Security trust fund shortfall.
The transaction would put the trillion in the Social Security trust fund. That is a fiction. It is a book-entry U.S. Treasury security. That’s what the Social Security trust fund is. When it goes down, its holdings of Treasuries go down. When it goes up, its holdings of Treasuries goes up. Nothing more than a book-entry Treasury security.
So, if you reconstruct the gold certificate, you have a trillion dollars in the Social Security trust fund. You have reduced or funded a trillion dollars’ worth of borrowing by the United States of America selling bills, notes, or bonds.
That’s a temporary fix. We are running a $2 trillion annual deficit run rate. So, this proposal to use the gold certificate revaluation for the Social Security trust fund is a sham. It buys six months of the deficit-finance pressure on the U.S. Treasury securities market, and then it’s over. It’s a one-time.
It would be the worst possible use of that gold certificate revaluation. Whether you were to do it with some other purpose, redo the whole financial structure of the energy grid of the United States, or do something in a massive infusion and correction of the entire public healthcare system, or fund a sovereign wealth fund and move all this hodgepodge of asset creation in the United States budget into the sovereign wealth fund where it could be managed and visible and seen and have a board of trustees.
Makes no difference what you do when you do something, but the worst thing to do would be to put the trillion in the Social Security trust fund and kick the political can down the road for 6 months. And at the end of the six months, we’d be right where we are, and worse.
That’s my opinion. Thank you very much. I hope you have a good Labor Day weekend holiday. Thank you.
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