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luigirovatti's avatar

Do you think the following quote describes correctly why countries who own the US money don't ask for gold in repayment right now?

Asked by luigirovatti (2196points) April 13th, 2020

“It would create a dangerous economic crisis. The American national debt is about 17 trillion of dollars. To pay that off with gold at $1,700 an ounce would require 14 billion ounces of gold. The total amount of gold in the world is only about 5 billion ounces. The amount in Fort Knox is only about 140 million ounces, 2.5 per cent of the world total. If you sold all the gold in your Fort Knox, it would be sufficient to pay off about 1.2 percent of your country’s national debt. That large a sale would depress your gold values, so it would pay off even less. It would not change anything. You would have lower debt, but equally lower assets.

A big national debt can be a wonderful thing, too. It means the people and countries that have loaned money to your country have a very strong interest in helping keep your dollar strong and healthy. These are powerful incentives against starting a war against your country. Other countries, like China, would be one example. Their welfare is now strongly tied to yours, which can be interpreted as a very good thing. So paying off your national debt in gold would not improve your economic situation at all. It would strongly destabilize the world economic and political situation. To pay such a debt, you would have to triple your accessible world supply of gold, but that would also collapse the value of your gold in your mind and economic systems. It would be a hazardous trade, if it were ever to happen. Ultimately things always change, but the United States will never return to the economics of a half century ago. Hopefully, in that distant future, change will be peaceful.”

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6 Answers

stanleybmanly's avatar

The change that is coming, “and that right soon” is crypto currency. The world’s current monetary setup is every bit as corrupt and corrupting as those disproportionately profiting from it. And this country’s ability to print money at will rests solely on the fact that the dollar holds the world hostage. Smart money is already engaged in the rapidly increasing flight from traditional currencies which presages world shattering changes that will parallel or exceed the significance of the internet itself. The coming decade promises the elimination of banks, credit cards, and the fundamental alteration of the concept of debt and interest itself. All of us should school ourselves for a thorough understanding of the concept and workings of bitcoin, which is already sorting the coming wave of billionaires from the billions of losers who are going to be caught flat footed.

Tropical_Willie's avatar

Because they know it will be 10 cent on the dollar. They cannot get all the money due them, bankruptcy of the USA they would not get their money back.

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zenvelo's avatar

The quote shows a complete lack of understanding of how economies work; One reason we are no longer on a gold standard is because one cannot expand an economy that is based on a metal. The money supply is how the central bank can keep the economy moving without huge disruptions.

And crypto currency does not “solve” the problem. It just redenominates it into some fantasy ponzi scheme. There is no wealth created by crypto currencies, just a different wayy of accounting.

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