Gold and repression

The price of Gold keeps making new highs expressed in every currency, included the dollar, of course. US gold reserves, supposedly the biggest in the world, are now worth $1Tn, if the U.S. were to apply current prices to its book value position. We can argue that by doing so, the Fed will creating money out of thin air, like QE, and credit the asset side of the US treasury, that could potentially reduce debt by that amount. If that were to happen, that could be considered a default, since the US would be repaying debt with debased dollars, using financial repression to reduce the debt. It’s interesting and scary at the same time to see that the U.S. dollar has lost 81% of purchasing power since the year 2000. And that calculation is made using official CPI data, which we know is underestimating inflation. The reality is that the U.S. does not have the discipline or the inclination to repay the debt any other way. Quite the contrary, Congress is spending more and increasing the deficit. In fact, the government will be shut down today due to Congress inability to control spending within the currently agreed budget and debt ceiling. How long will it take for treasury bonds to reflect this on their yields?

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