Federal Reserve Notes Are Backed By Gold « REALITY BLOG

Federal Reserve Notes Are Backed By Gold

 

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It is always good to know that the sacrifices I’ve made and the endless hours of research I’ve done don’t just fall on deaf ears…

I received an email a couple of days ago from a reader of my blog, who went above and beyond the call of duty to verify the research in my recent videos, not just taking it at face value. If only all of us did this with each others research, we would no doubt have a whole lot less confusion in our search for “truth”.

Besides my gratitude, I would also offer this man my highest accommodation of valor (if I had one) for taking the time to not only find the Comprehensive Annual Financial Reports (CAFR’s) I mentioned, but to read them and link them in his email.

Thank you, sir!

I’d like to share that email here…

“John Smith” wrote:

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Fact: The Federal Reserve Notes are backed by gold.

Yes, you read that right. The Federal Reserve notes are backed by gold.

Hitler (Joseph Goebbels) was right when he said, “If you repeat a lie enough times, people will believe it (paraphrase).”

I know what you are thinking. OK, John. Prove it.

If you look at page 453 and 490 of  the 2009 Annual Financial Report of the Federal Reserve (CAFR) you will see there actually is collateral held against Federal Reserve Notes. This means the money we use is backed by something.

(LINK – http://www.federalreserve.gov/boarddocs/rptcongress/annual09/pdf/ar09.pdf)

What is it backed by?

There is the Gold Certificate Account (The Fed has the gold and the Treasury has the certificates.)

How much gold?

$11,037,000,ooo. worth of gold. This can also be found on page 61 of the Federal Government’s CAFR.
(LINK - http://www.gao.gov/financial/fy2010/10notes.pdf)

How many (troy) ounces (of gold) is backing the Federal Reserve Notes? On page 62, the last paragraph reads:

“Gold is valued at the statutory price of $42.2222 per fine troy ounce. The number of fine troy ounces was 261,498,900 as of September 30, 2010, and 2009. The market value of gold on the London Fixing was $1,307 and $996 per fine troy ounce as of September 30, 2010, and 2009, respectively. Gold totaling $11.1 billion as of September 30, 2010, and 2009, was pledged as collateral for gold certificates issued and authorized to the FRBs by the Secretary of the Treasury. Gold certificates were valued at $11.0 billion as of September 30, 2010, and 2009, which are included in Note 19—Other Liabilities. Treasury may redeem the gold certificates at any time. Foreign currency is translated into U.S. dollars at the exchange rate at fiscal year-end. The foreign currency is maintained by various U.S. Federal agencies and foreign banks.”

 

How much money (Federal Reserve Notes) is in circulation?

All of that hard and easily liquidated currency is known as the M0 money supply. This includes the bills and coins in people’s pockets and mattresses, the money on hand in bank vaults and all of the deposits those banks have at reserve banks. According to the Federal Reserve, there was $908.6 billion in the M0 supply stream as of July 2009.

(LINK -  http://www.federalreserve.gov/releases/h41/20090730/)

What is the real value of the Federal Reserve Notes?

This can be viewed 2 ways (statutory value or market value).

Let’s do some calculating:

The statutory price of gold is $42.2222 per ounce. The Fed is holding 261,498,900 ounces of gold This equals to $11,041,058,855.58 ($11 billion). There is $908,600,000,000 ($908 billion) in circulation. According to the statutory price of gold, the dollar is worth $.012 (Just over 1 cent per dollar).

The market price of gold is $1,307.00 per ounce. The Fed is holding 261,498,900 ounces of gold. This equals to $341,779,062,300.00 ($341.7 billion). There are $908,600,000,000 ($908 billion) in circulation. According to the market price of gold, the dollar is worth $0.37 (37 cents per dollar).

(Note: The average market price of gold is actually over $1,600 for November)

I guess the dollar really isn’t worth a dollar (in gold).

Warning: My lack of funds are being compensated by my knowledge.

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Again, my congratulations to John for taking the initiative to research and verify the facts (instead of just insulting the messenger).

.

–Clint Richardson (realitybloger.wordpress.com)
–Monday, November 21, 2011

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