The Truth about Ben Bernanke's Audits and the Fed's Supply of Gold

On the home page, of the Board of Governors of the Federal Reserve web site, sitsa box. Inside the box a question is asked and answered: Does the Fed Get Audited? YES.

The box also includes a link to this, an FAQ about the audits. The FAQ includes a two click away link to what is called by the FAQ, the Feds "balance sheet."

It should be clear that this "balance sheet" is unlike any in corporate America. Indeed, H.4.1, as the release is officially known, refers to itself as "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," rather than a balance sheet. There are many curious things about this "Condition Statement," but today I want to focus on just one. The gold that is listed on the statement.

If we look at Table 1 of this statement, we see that the Fed lists its gold "stock" as being equal to $11,041 million.

By the time we get to Table 8 of the same statement, we see gold as reduced a bit to $11,038 million, but more important, instead of continuing to be listed as "gold stock," it is listed as being part of the "Gold certificate account".

Table 9 lists the gold again as being in the "Gold certificate account." Table 9 is identified as the "Statement of Condition of Each Federal Reserve Bank, June 12, 2013" and has a branch by branch breakdown of where these gold certificates physically are. The New York Fed has the most with a reported $ 3,925 million in gold certificates and the Minneapolis Fed having the smallest amount, $190 million.

But, if it wasn't clear by Table 8, it sure is clear by Table 9, that unlike in Table 1, the Fed is talking gold certificates and not physical gold.

The Fed once more in its final table of the statement of condition, Table 10,aka the Collateral Held against Federal Reserve Notes: Federal Reserve Agents' Accounts table, lists $11,038 million in gold certificates. 

Thus, the Fed in fact does not hold any physical gold (outside of foreigners gold held at the New York Fed). The gold that is held, according to the Fed as "collateral against Federal Reserve Notes" is really gold certificates. Where do these certificates come from? This Fed statement does not tell us. But with a bit of internet snooping, we can reach a pretty good guess that the certificates are created by the Treasury. 

In a very confusing Treasury statement, Status Report of U.S. Treasury-Owned Gold, the Treasury reports that the Fed holds $564,890,013.03 worth of gold (based on a gold valuation of $42.2222 per ounce). But this appears to not be gold owned by the Fed, but gold held by the Fed for foreigners. Putting this on the statement is not much different than the landlord of Tiffany's putting on his personal "statement of condition" the diamonds owned by Tiffany.

However, if we move further down this Treasury statement, we see (my highlight):

Total - Treasury-Owned Gold 261,498,926.247 $11,041,059,958.16

So there we have it, the gold certificates listed by the Fed match up exactly with the Treasury owned gold. Mystery solved, the gold that the Fed claims is collateral for the Federal Reserve Notes is held by the Treasury. Or is the mystery really solved? If we look at the  U.S. International Reserve Position of the Treasury as of January 25, 2013, we see the $11 billion in gold listed, but then this curious note in parentheses in the statement:  "including gold deposits and, if appropriate, gold swapped". So the real question becomes: has any of the gold been swapped out, to whom, and under what conditions? One would think some or all has been swapped out otherwise the note wouldn't be there in the first place.

So here is the current situation with regard to Fed owned gold. It is not as Table  1 of the Fed's Condition Statement records a "stock" of gold. It is, as Tables 8, 9 and 10, report merely gold certificates held by the Fed. A little more digging shows the Treasury as the source of the certificates, but that a note to a Treasury statement indicates the gold may have been swapped out, but exactly how much has been swapped with whom, for what, is undisclosed.

Thus, based on public information, it is not clear if Ben Bernanke is even aware of how much gold backs up the Treasury certificates it reports as it's gold "stock". It may be a fair question to ask Bernanke in his upcoming press conference or in the next Congressional hearing if his "audits," that are touted on the front page of the Fed's web site , have actually sought to determine how much gold the Treasury has to back up the gold certificates the Fed has on its balance sheet. Or is he not curious and thinks a front page trumpeting of Fed audits can be made without knowing the true backing of the gold behind he Treasury certificates?

WaPo: "Rand Paul is the most interesting man in the (political) world"

 Chris Cillizza at Wapo's The Fix writes:

The first six months of 2013 have made two things very clear: 1) Rand Paul is running for president and 2) Rand Paul is the most interesting politician in the country at the moment[...]

Paul is, without question, a prime mover in two arenas right now: the Senate and the presidential race[...]

What Republicans — establishment-types and others — find most intriguing about Paul is his potential to appeal in directions and demographics (civil libertarians, young people etc.) that get the party beyond the coalition built by Ronald Reagan in the 1980s. (We’ve written lots of late on the growing libertarian strain in the country and Paul is the elected official most closely aligned with those views.)[...]

Whether Rand Paul winds up as a top-tier presidential candidate in 2016 — we think he will be — it’s clear he is someone who has not only avoided being pigeonholed on any one issue but also leapt over the expectations many people had for him when he was first elected in 2010[...]

Here’s where Paul fits at the moment: he is the most interesting person in the Republican political world.  And that’s a good place to be.

Keep in mind, this coming from the core of the Washington establishment, a core that had trouble spelling Ron Paul's name correctly.

Who is running Rand Paul?

Slipping the constitutional leash

Slipping the constitutional leash – Washington Post

Or, more precisely, actual war is not the only cause. Ersatz “wars” — domestic wars on various real or imagined vices — also wound the defense of limited government. So argue David B. Kopel and Trevor Burrus in their essay “Sex, Drugs, Alcohol, Gambling and Guns: The Synergistic Constitutional Effects.”
Kopel and Burrus, both associated with Washington’s libertarian Cato Institute, cite the 1914 Harrison Narcotics Act, which taxed dealings involving opium or coca leaves, as an early example of morals legislation passed using Congress’s enumerated taxing power as a pretext. In 1919, the Supreme Court held that the law “may not be declared unconstitutional because its effect may be to accomplish another purpose as well as the raising of revenue.”
Its “effect”? The effect of suppressing the drug business obviously was its purpose. Nevertheless, the court held that even if “motives” other than raising revenue really explained Congress’s exercise of its enumerated power, the law still could not be invalidated “because of the supposed motives which induced it.”

Has inflation fueled the two-income household trap in the US? – My Budget 360

Has inflation fueled the two-income household trap in the US? – My Budget 360

Inflation in the United States is largely seen as a built in part of our economy.  People take it for granted as if this was simply the order of things.  Yet our central banking system has inflated our debt based financial system and subsequently, the value of money has eroded.  For example, most items that are financed through debt have increased dramatically during a time when household income has reverted to inflation adjusted levels of the 1990s.  The cost of inflation is hidden of course from the eyes of the public as to not shock people into action.  Playing with interest rates, a car that once cost $20,000 is now going for $30,000 but the monthly payment has remained the same thanks to the Fed’s unrelenting push to lower interest rates.  There is a cost to all of this of course.  If it were so simple to fix an economy, the Fed would simply send unlimited debit cards to each and every American.  Inflation is a threat to the economy from the perspective that it destroys the purchasing power of working and middle class Americans, those with limited access to debt.  In our economy, debt provides access to real assets and those with the most access to debt (banks) can lock into the larger share of assets (i.e., banks now buying up thousands of rental properties).  Is inflation a main culprit in the two income trap?

Venezuela on the brink of hyperinflation – Economonitor

Venezuela on the brink of hyperinflation – Economonitor

Hyperinflation has a long history, but no official definition. In an influential 1956 paper, Phillip Cagan suggested limiting the term to a rate of inflation of 50 percent per month or more, which is equivalent to an annual compound rate of about 14,000 percent. That would fit extreme cases like Weimar Germany, Hungary after World War II, or, more recently, Zimbabwe, in which inflation rates reached millions or trillions of percent per year.  Although some economists still adhere to Cagan’s guideline, others prefer a more flexible definition. I like to apply the term hyperinflation to any case in which inflation seriously undermines the ability of money to serve its classic functions as a store of value, a unit of account, and a medium of exchange. That can begin to happen at rates of inflation of 100 percent per year or even less. Less extreme cases like Russia, Argentina, and Bulgaria in the 1990s would qualify, even though inflation reached only the low thousands of percent per year. Venezuela may well be approaching such an episode now.

The Central Bank of Venezuela recently reported an inflation rate for May of 6.9 percent, equivalent to an annualized rate of more than 100 percent. Does this mean that Venezuela is on the brink of hyperinflation? A quick look at the relevant economic concepts suggests that hyperinflation is in fact a real danger.
What is hyperinflation and where does it come from?
Hyperinflation has a long history, but no official definition. In an influential 1956 paper, Phillip Cagan suggested limiting the term to a rate of inflation of 50 percent per month or more, which is equivalent to an annual compound rate of about 14,000 percent. That would fit extreme cases like Weimar Germany, Hungary after World War II, or, more recently, Zimbabwe, in which inflation rates reached millions or trillions of percent per year.
Although some economists still adhere to Cagan’s guideline, others prefer a more flexible definition. I like to apply the term hyperinflation to any case in which inflation seriously undermines the ability of money to serve its classic functions as a store of value, a unit of account, and a medium of exchange. That can begin to happen at rates of inflation of 100 percent per year or even less. Less extreme cases like Russia, Argentina, and Bulgaria in the 1990s would qualify, even though inflation reached only the low thousands of percent per year. Venezuela may well be approaching such an episode now.
- See more at: http://www.economonitor.com/dolanecon/2013/06/14/venezuela-on-the-brink-of-hyperinflation/#sthash.0CFT43Q2.dpuf

Hyperinflation has a long history, but no official definition. In an influential 1956 paper, Phillip Cagan suggested limiting the term to a rate of inflation of 50 percent per month or more, which is equivalent to an annual compound rate of about 14,000 percent. That would fit extreme cases like Weimar Germany, Hungary after World War II, or, more recently, Zimbabwe, in which inflation rates reached millions or trillions of percent per year.
Although some economists still adhere to Cagan’s guideline, others prefer a more flexible definition. I like to apply the term hyperinflation to any case in which inflation seriously undermines the ability of money to serve its classic functions as a store of value, a unit of account, and a medium of exchange. That can begin to happen at rates of inflation of 100 percent per year or even less. Less extreme cases like Russia, Argentina, and Bulgaria in the 1990s would qualify, even though inflation reached only the low thousands of percent per year. Venezuela may well be approaching such an episode now.
- See more at: http://www.economonitor.com/dolanecon/2013/06/14/venezuela-on-the-brink-of-hyperinflation/#sthash.0CFT43Q2.dpuf

Will's Words of Wisdom on Immigration

George Will may be right about not trusting the executive branch, but this bill will still be the end of the Republican Party.

 “The question of border security is now tangled up with the IRS and the Justice Department and the general, pervasive distrust of the executive branch,” he explained. “Because what the bill says is, ‘The executive branch will certify if the border is secure.’ I don’t believe that the Republicans in Congress are going to take that.”
“They’re going to vote for a bill — or against a bill — whether or not it has ‘Congress shall certify,’ not the executive branch, because no one trusts the executive branch anymore.”

Bye-bye 5th Amendment! Supreme Court Decides: Anything You Don’t Say Can and Will Be Used Against You

http://www.theorganicprepper.ca/supreme-court-decides-anything-you-dont-say-can-and-will-be-used-against-you-06182013

 Everyone knows that when building a police state, it’s vital to strike a few Constitutional rights off the books.  Now, we can add the right to remain silent to the graveyard of the American justice system.  How can you expect the people to be properly subjugated with all those pesky freedoms that the Bill of Rights blathers on about?  The would-be totalitarians can chalk up another victory, because the Supreme Court has made the decision that if you opt to remain silent, that silence can (and will) be used against you in a court of law.  The Fifth Amendment to the Constitution guarantees our right against self-incrimination

Everyone knows that when building a police state, it’s vital to strike a few Constitutional rights off the books.  Now, we can add the right to remain silent to the graveyard of the American justice system.  How can you expect the people to be properly subjugated with all those pesky freedoms that the Bill of Rights blathers on about?
The would-be totalitarians can chalk up another victory, because the Supreme Court has made the decision that if you opt to remain silent, that silence can (and will) be used against you in a court of law.
The Fifth Amendment to the Constitution guarantees our right against self-incrimination
- See more at: http://www.theorganicprepper.ca/supreme-court-decides-anything-you-dont-say-can-and-will-be-used-against-you-06182013#sthash.seFHKj3f.dpuf

Everyone knows that when building a police state, it’s vital to strike a few Constitutional rights off the books.  Now, we can add the right to remain silent to the graveyard of the American justice system.  How can you expect the people to be properly subjugated with all those pesky freedoms that the Bill of Rights blathers on about?
The would-be totalitarians can chalk up another victory, because the Supreme Court has made the decision that if you opt to remain silent, that silence can (and will) be used against you in a court of law.
The Fifth Amendment to the Constitution guarantees our right against self-incrimination.

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

- See more at: http://www.theorganicprepper.ca/supreme-court-decides-anything-you-dont-say-can-and-will-be-used-against-you-06182013#sthash.seFHKj3f.dpuf

Edward Snowden: "This country is worth dying for"

http://truthingold.blogspot.com/2013/06/edward-snowden-this-country-is-worth.html 

Bathtub falls and police officers kill more Americans than terrorism, yet we've been asked to sacrifice our most sacred rights for fear of falling victim to it.  - Edward Snowden 

 Since the mainstream media, as directed by the Government and corporate entities who control the flow of news, is smearing Edward Snowden as a traitor and are flooding all of the news outlets with outright lies, I wanted to publish a follow-up open Q&A held by The Guardian  and Glenn Greenwald.  I've posted some of the most "piercing" answers from Snowden, including this one about Obama, which summarizes exactly what went through my mind about Obama after his first 100 days

And his coup de grace:

it's important to bear in mind I'm being called a traitor by men like former Vice President Dick Cheney. This is a man who gave us the warrantless wiretapping scheme as a kind of atrocity warm-up on the way to deceitfully engineering a conflict that has killed over 4,400 and maimed nearly 32,000 Americans, as well as leaving over 100,000 Iraqis dead. Being called a traitor by Dick Cheney is the highest honor you can give an American, and the more panicked talk we hear from people like him, Feinstein, and King, the better off we all are. If they had taught a class on how to be the kind of citizen Dick Cheney worries about, I would have finished high school.

We've turned into a house of ill repute. We need more Snowden's,  bottom line MSM get you're collective heads out of your asses. I understand a Job is a job, without a free Country there is no job.

Hero's in action

http://www.wect.com/story/22605650/eyewitnesses-describe-the-terror-of-dui-checkpoint-shooting 

 

Additional details of the circumstances are reportedly being withheld by authorities, but in an interview with WECT TV, witnesses in Brunswick County, North Carolina describe deputies blasting away in the direction of on-coming traffic in a shooting incident at a DUI checkpoint.

Spray and pray. Seems to the new norm for many in law enforcement. Feel safer?

 

European Car Sales Drop To 20-Year Low, Germany Clobbered

http://www.zerohedge.com/news/2013-06-18/european-car-sales-drop-20-year-low-germany-clobbered

When the S&P, always so conveniently ahead of the curve, yesterday revised its forecast for Europe from growth in the second half of 2013 to 2014 one couldn't help but golf clap, as well as wonder if they finally started looking at the fundamental depressionary reality on the ground instead of the rating agency's infamous "models." A depressionary reality confirmed by the latest car sales number for May which just hit a fresh 20 year low.
From AP:

European car sales hit their lowest level for the month of May in 20 years as the region's recession dragged on, the European automakers' association said Tuesday.