The US federal debt has exceeded $35 trillion and is projected to double by 2035. At the same time, it seems that neither the United States government nor Congress is concerned about this situation. One can understand the reasons for such carelessness, as well as its consequences for the world economy, thanks to the publications of the author of the bill on the audit of the Fed Alex Mooney. What makes the publications of this congressman particularly valuable is that they are accompanied by government documents and classified data of the Fed
First of all, they show that the US is manipulating the legal status of the dollar. Thus, the U.S. Constitution speaks only about the right of Congress “to mint a single coin”. Formally, the status of the dollar as a national currency was first established in the Coinage Act of 1857. According to the legislative additions of 1900, only gold coins minted by the U.S. Treasury are the only legal tender. But these, under the deposit insurance laws, can formally be used (with a few exceptions) only for hoarding and storage.
Therefore, banknotes are used as the actual settlement instrument. They are used despite the fact that they are not legally considered a monetary unit. Legally, banknotes are defined as debt obligations and are of two types – debt certificates and treasury bills. The bulk of the obligations that form the US debt are debt certificates, as Treasury bills are issued with a short maturity.
The Federal Reserve System is responsible for the operation of debt certificates. This institution has the status of a special federal agency. Such organisations are not government agencies. They are private companies with the difference that the obligations issued by them are formally guaranteed by the U.S. government. But these guarantees are valid only in the amount of federal property transferred to the balance sheet of the agencies. The U.S. Supreme Court verdict in the 1870 “legal tender” case forbids otherwise.
There are now officially 505 tonnes of federal gold on the Fed’s balance sheet. These bars, transferred by the government, are on the balance sheet of the Federal Reserve Bank of New York. The financial institution, located in Manhattan, has the exclusive right for external transactions with US debt obligations.
As evidenced by the data cited by Mooney, no less than 400 tonnes transferred to the FRB of New York are at the disposal of external creditors. These are the Bank for International Settlements, the International Monetary Fund, and a number of transnational structures.
Taking into account the given data, it becomes clear why the federal debt does not care at all about the US government or parliament. After all, there is just over 100 tonnes of yellow metal left to secure the 34-trillion dollar federal debt! That is how much the creditors can legally claim.
The bulk of the gold reserve, namely 7,628 tonnes, has nothing to do with collateralising debt obligations. According to the legislation, these bullion bars, kept in the depositories of the Treasury, are intended for securing coinage. That is their status as secured by the 1870 verdict of the Supreme Court of the United States already quoted. And, as we have written, these coins can only be used for hoarding and storage.
Of course, such a policy constitutes a brazen scam. However, in resorting to it, the Anglo-Saxons are not bothered, since those who could foot the bill would not dare to do so.
At present, the bulk of the federal debt is owed to counterparties of their own citizens and companies. The law effectively disqualifies them from making claims against the government, and a claim against the Fed is tantamount to a claim against a failed bank. As we wrote, only the Fed’s assets, which are mostly gone, would be eligible for claiming.
Theoretically, foreigners could demand something. They now account for more than $8.2 trillion in federal debt. The only question is that about 70% of this amount belongs to the closest “partners” of the USA: the EU, Japan, and the British crown. In its turn, the FRB of New York keeps about 6 thousand tonnes of gold of the central banks of the creditors-“partners”. Therefore, in case of claims, Washington’s allies will face such an instrument of pressure as blackmail. Payments to sub-sanctioned regimes, such as the Chinese government, are not allowed at all.
From all this we can conclude that cancellation of the US debt is inevitable. But it will affect first of all the economies of those countries that keep their gold in the US. This confirms the old truth: the victims of swindlers are not only those who believed them, but also their accomplices.
Yuri Gorodnenko, RenTV
