President Trump and the Fed

President Trump recently stated that he would appoint Judy Shelton to the Federal Reserve.  That is the duty of the President. His responsibility is to appoint individuals to the Board of Governors of the Fed and to fill any appointments when they occur.

On March 21, 2014, I published a very well researched article which I believe provided a great deal of factual information for consideration.  The article was titled: ” Goldfigure: Fort Knox and the Price of Gold.”  If readers wish to read or reread this article, simply type, Fort Knox, into the search box on the home page of this website and the article will appear.

While the U.S. National Debt has increased since that article was written, the underlying calculations remain accurate.  To the best of my knowledge the amount of gold held in the extremely secure Fort Knox remains at 368,000 gold bars.  That number of gold bars is equal to 147,300,000 ounces of gold.  Using the National Debt at the date the article was written, the price of gold would have to have been greater than $ 120,000.00 per ounce to cover our National Debt at that point in time.  Now gold is a valuable metal and has been throughout much of world history.  But $ 120,000.00/ounce is a very high amount.  It would be higher today with the significant increase in the U.S. National Debt since the article was written.

In that article, I speculated how the U.S. might handle the situation.  A quote from that article reads: ” … I am not wise enough to know the exact answer…”  One possibility that I did not discuss, but I have thought about at length is to allow the Board of Governors of the Federal Reserve System to buy and/or sell gold from our supply in Fort Knox.  Possibly the regulations could allow the Governors to buy/sell gold once every six months on the open market.  Additionally the Governors would be allowed to buy/sell gold as a percentage of the U.S. supply.  For example the Governors of the Fed might be  allowed to buy/sell gold, but restricted to 1% of our gold supply at an offering.  OK, lets do the math. A buy/sell transaction restricted to just 1% of our supply would be 3,680 bars of gold which translates into 1,473,000 ounces of gold !!

Allow me to assist President Trump and Judy Shelton who must indeed be much smarter than I.  Possibly President Trump, with his impressive business degree from Wharton, probably already has a complex paradigm completely worked out that may be vastly superior to my paradigm.  Also, individuals who do not trade on the international markets must remember that an offer to sell may be so high that there are no buyers.  Also, an offer to buy may be so low that there are no sellers.

Also, Americans must remember that the Federal Reserve Act of 1913 that created the Fed was wise in that it removed the ability of Congress to establish interest rates and vested this important monetary function in seven Governors of the Fed.  Certain institutions of the U.S. Federal Government work fairly well on paper and in reality.  Other institutions of the Federal Government are extremely dependent on the quality of the individuals appointed by the President.  The term for an appointment to the Board of Governors is for 14 years.  The Fed is designed so that every two years a Governor’s term expires.  So, unlike his cabinet, when a President appoints a Governor, that Fed Governor may be there years after the President has left office.  Also a Fed Governor may retire or resign before their term expires and that allows the individual who is President to appoint a Fed Governor for the remainder of that term.

I look forward with very great interest to study in depth exactly what Judy Sheldon’s plan entails.

R. Van Conoley ( Editor’s Note: I fully realize that I omitted the operations of the Fed Open Market Committee.  For the “grey beards” and the experts in international finance and economics, The Open Market Committee consists of the seven Fed Governors plus five members selected from the heads of the twelve regional Fed Banks.  Some may remember that President Obama appointed Tim Geithner to the Fed as well as the U.S. Treasury Department.   I, along with the Chinese, are still laughing about this.  Also, Americans must keep in mind that the Glass-Steagall Act worked very well for many years.  The Glass-Steagall Act was weakened beginning under President Bill Clinton and effectively destroyed after the 2008 depression when new banking legislation became law. )

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