Law & Liberty/Alex J. Pollock and Paul H. Kupiec/11-28-2022
“Although it is against the current rules of the Euro system, it would make perfect sense to include the market value of the gold when calculating [De Nederlandsche Bank’s] capital, as the Swiss National Bank does. (This idea would not help the Federal Reserve, because it owns no gold.) It is no small irony that, to bolster their capital, modern fiat currency central banks would consider turning to the value of the ‘barbarous relic’ of gold, against which their own currencies have over time so greatly depreciated.”
USAGOLD note: Since we have never been here before, it is difficult to say how this all translates from the central banks to the world at large. Pollock and Kupiec believe that the burden falls on the taxpayer, but that does not define the scope of the problem. The Fed carries about $8 trillion in Treasury paper ($5.7 trillion) and mortgage-backed securities ($2.3 trillion). The Treasuries exposure alone is considerable in what has become a very volatile market – down about 29% year to date (using TLT as a reference).
