At the February FOMC press conference, Federal Reserve Chairman Powell was asked, “…about the debt ceiling. Given that we’ve now hit up against it…will the Fed do what Treasury directs as it relates to making payments or will it do its own analysis of any legal constraints?” Powell responded, “There’s only one way forward here, and that is for Congress to raise the debt ceiling.” The New York Times took issue with this response, peddling the idea that the Treasury could mint an obviously phony trillion dollar coin to pay the government’s bills.
But those are not the only choices.
There is a better way forward that is legally sound and has nothing to do with creating a fictitiously-valued platinum coin. Congress should simply direct the US Treasury to value its gold holdings, which are real, at real market prices. The Treasury would then have sufficient funds to pay its bills beyond fiscal 2023 without raising the debt limit. The current market price of gold is a little over $1,875 per ounce. Treasury owns about 261.5 million ounces of gold, or more than eight tons. Because the Gold Reserve Act, as amended by Congress in 1973, requires the US Treasury to value its gold at $42.22 on ounce, the
Treasury values its gold holdings at a little over $11 billion whereas
the true market value of its gold is roughly $490 billion..............To Read More....
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