Why Gold Revaluation Reduces USG Power

You’ve got a better chance of seeing a $1 trillion coin than gold revaluing. August 19, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Why Gold Revaluation Reduces USG Power SEAN RING Did you ever get that feeling when you think you know something, and then someone unlocks a whole new level of understanding for you? My friend and teaching mentor Simon once told me, “The only thing I care about when teaching a class is seeing one student—just one—widen his eyes and gasp for air. It's the a-ha moment. I live to create those moments for my students.” I’ve just experienced one of those moments, thanks to a great piece Chris Powell wrote for Money Metals that [Zero Hedge picked up](. There are two things I thought I understood but didn’t. - Why the idiotic idea of minting a trillion-dollar coin isn’t as ridiculous as it seems. - Why the US government doesn’t revalue gold to get out of its financial hole. In this edition of the Rude, I’ll cover both and how they’re related. Remember When Jon Stewart Called Out Krugman? Before I get into this, let me be clear: minting trillion-dollar coins in the hope of evaporating existing debt is ludicrous. It’s just that there is an obscure Treasury statute that allows it. I remember when, in early 2013, the Obama administration floated the idea of minting a trillion-dollar coin. To anyone with a modicum of common sense, this was a ridiculous solution to the problem of government overspending. But what I remember even more than that stupid idea is the spat between Jon Stewart of The Daily Show and Paul Krugman, the Nobel Prize-winning blogger at The New York Times. Luckily, [Marc A. Thiessen over at the American Enterprise Institute chronicled the kerfuffle]( In the Washington Post this week, I noted that if the president could really create a trillion dollars out of thin air simply by minting a magic coin, why would he stop at one? He could mint 17 and eliminate the national debt — or 18 and have a trillion-dollar surplus. Well, apparently Jon Stewart had the same reaction, declaring on his Comedy Central show, “If we’re going to make shit up, I say go big or go home. How about a twenty-trillion dollar coin?” That did not go over well with the magic coin’s chief proponent, New York Times columnist Paul Krugman. Krugman blasted the comedian for “a lack of professionalism” in mocking the magic coin idea, adding, “Those people look dumb to me… he’s ruining his own brand.” Last night, Stewart fired back, declaring, “First of all, I’m pretty sure that is my brand. And second of all, if somebody is ruining their brand with a trillion-dollar coin idea, I don’t think it’s the non-economist.” Why isn’t this as dumb as it sounds? I hope you’re sitting down. The statute that allows the U.S. Treasury to mint platinum coins of any denomination is 31 U.S.C. § 5112(k). This section of the United States Code grants the Secretary of the Treasury the authority to mint and issue platinum bullion coins in any denomination, quantity, specifications, designs, varieties, quantities, and inscriptions as the Secretary may prescribe. The key text from the statute reads: "The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time." 31 U.S.C. § 5112(k) was enacted as part of the Omnibus Consolidated Appropriations Act of 1997, which President Bill Clinton signed into law on September 30, 1996. Here’s the onion: the provision was originally intended to give the U.S. Mint flexibility in producing platinum coins for collectors and investors. But its broad language has since become the basis for discussing other potential uses, such as a stupid, hypothetical trillion-dollar coin. It’s utterly ridiculous, isn’t it? But what's worse is that printing trillions of dollars in platinum coins allows the USG to retain hegemony in a way that revaluing gold doesn’t. [“Hidden” 79 day profit window from now until election day]( Jim Rickards just put the finishing touches on [a major update to his 2024 election thesis](... It all centers on a shock the former White House advisor sees taking place this Monday, August 19th… A shock that could unleash a “hidden” 79 day profit window from now until election day for those who are prepared. [Click here now to learn more]( Why Gold Revaluation May Be a Pipe Dream As always, it’s all about power. He who owns the most gold controls the world. And the United States won’t call the shots if it’s all about gold holdings. Credit: [World Gold Council]( Yes, Europe has more gold than the United States. Those intelligent Europeans repatriated their gold from the U.S. once they realized the USG printed far more paper than the gold bars they had. This position terrified the USG, especially the lately unlamented Henry Kissinger. But he asked the right questions. Koos Jensen (the then-pen name for gold researcher Jan Nieuwenhuis) found the minutes of an extraordinary meeting in the State Department archives in Volume 31 of "Foreign Relations of the United States, 1973-76." Secretary of State Kissinger wondered why we wouldn’t want gold in the monetary system. In an April 1974 exchange, Assistant Undersecretary of State for Economic and Business Affairs Thomas O. Enders [explained the situation to him]( Mr. Enders: It's against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically. Although we have still some substantial gold holdings -- about $11 billion -- a larger part of the official gold in the world is concentrated in Western Europe. This gives them the dominant position in world reserves and the dominant means of creating reserves. We've been trying to get away from that into a system in which we can control ... Secretary Kissinger: But that's a balance-of-payments problem. Mr. Enders: Yes, but it's a question of who has the most leverage internationally. If they have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible -- no longer acceptable. Therefore, we have gone to Special Drawing Rights, which is also equitable and could take account of some of the less-developed-country interests and which spreads the power away from Europe. And it's more rational in ... Secretary Kissinger: "More rational" being defined as being more in our interests or what? Mr. Enders: More rational in the sense of being more responsive to worldwide needs, but also more in our interest. ... And there you have it. [Ben Bernanke lied to Congress after the Great Financial Crisis when Congressman Ron Paul (peace be upon him) asked him why we hold gold instead of diamonds.]( The real reason is that gold is indeed money, and whoever holds the most controls the world economic system. Wrap Up This is why a trillion-dollar platinum coin is a more likely outcome than revaluing gold in our ridiculous Clown World. If the USG gets away with the platinum coin solution, only they will have increased reserves. But if gold is revalued, every government holding gold will increase its reserves, and that’s not what the USG wants. Do we still think the people we call Deep State or The Swamp are the good guys anymore? Have a great week ahead! All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… Drill, Baby, Drill! SEAN RING Good morning, once again, from beautiful Wroclaw, Poland. It’s been delightful here. As yesterday was a public holiday, I had time to wander around the city with Pam and Micah and read some of the mailbag. Before getting into the bag, I want to wish Philosopher-Truck Driver John Ring the happiest birthday! He’s a ripe 82 years young today. Sorry we’re not home, but we’ll celebrate when we return to Italy. Ok, here we go. Good friend and Head of Paradigm Press’s Director of Customer Experience, Dustin Weisbecker, sent me this message urgently to make sure I answer it: Can’t seem to get any response from PP for my question about drill-baby-drill resulting falling oil and natural gas prices ( and nice consumer impacts) versus what the heck it’s going to do to the energy recommendations made by all of PP’s analysts? Can anybody out there write about this a bit, or did I miss it? Seems that this should be a big concern for all PP subscribers. And analysts. Trump is talking about reducing the cost of energy by at least 50 percent within 12-18 months when taking office. Jim T. Jim T., I hope this message finds you well. As you're aware, I don’t typically recommend single stocks in the Rude unless I’m personally investing in them. However, I can certainly address your question in a more general sense. Trump’s Drilling, Baby! “Drill, baby, drill” goes back to the 2008 Presidential campaign, when John McCain and Sarah Palin topped the Republican ticket. When Palin debated Joe Biden in the Vice Presidential debate, Biden said that McCain thinks "the only answer is drill, drill, drill. Drill we must, but it will take ten years for one drop of oil to come out of any of the wells that are going to be drilled." Palin retorted, "The chant is 'drill, baby, drill.' And that's what we hear all across this country in our rallies because people are so hungry for those domestic sources of energy to be tapped into." Trump repeatedly used the line during this campaign, especially during his acceptance speech for the Republican nomination. What May Happen Donald Trump's "drill baby drill" policy, which emphasizes increased domestic oil and natural gas production, is positioned as a strategy to lower energy prices and enhance energy independence. However, the impact of such a policy on oil and natural gas prices and energy companies is complex. What follows is my best guess. Impact on Oil and Natural Gas Prices As you mentioned, Jim, Trump claims that ramping domestic drilling will lead to a YUGE decline in energy prices. But by 50%? That’s a bold call, indeed. Trump argues that increased production would lower consumer costs and reduce inflation, which he attributes to high energy prices. During his presidency, oil prices were relatively low, with West Texas Intermediate (WTI) crude oil averaging below $60 per barrel for much of his term. Right now, we’re trading in the mid-70s. Simply put, Trump should attribute inflation to reckless fiscal policy rather than high energy prices. Despite Trump's assertions, the U.S. has already achieved record levels of oil production under Joke Biden, averaging 12.9 million barrels per day in 2023, surpassing previous records. Increasing drilling may not have the immediate effect that Trump anticipates on prices. In fact, Paradigm Press Grand Poobah Matt Insley often tells me he thinks the already YUGE US supply is dampening oil prices rather than a grim economic outlook. Oil and gas prices are influenced by global supply and demand dynamics, geopolitical factors, and OPEC's production decisions. Even with increased domestic production, if global demand remains high or geopolitical tensions disrupt supply chains, prices may decrease less than Trump expects. For example, if Putin and MBS decide to get together and cut production, prices will soar no matter what the U.S. does. Impact on Energy Companies Energy companies will see a boost in production activities, increasing revenues in the short term. Companies involved in drilling and production will benefit from reduced regulatory constraints and increased investment in fossil fuel projects. However, the long-term sustainability of such a boom is yet to be determined. The energy sector has faced volatility, and a significant increase in production could lead to oversupply, which has historically resulted in price drops and financial strain on smaller companies. Trump's rollback of environmental regulations will undoubtedly facilitate increased drilling. Of course, the watermelons – green on the outside, commie red on the inside – will start legal proceedings, impacting operational costs and public perception of energy companies. [“The Mainstream Media Is Lying To You!”]( The media would have you believe that the worst of the supply chain issues are over. But the opposite is true… Behind the scenes, things are getting much, much worse. Bob Biesterfeld, CEO of one of the biggest logistics firms in the world, warns “the pressures on global supply chains have not eased, and we don’t expect them to any time soon.” This is going to impact every American’s life in a potentially major way… And I’m urging everyone I can to prepare now. [To see the #1 move to make before this problem gets any worse, click here now.]( Get Long Here Energy Sector Oil and Gas Companies: Increased domestic drilling will likely boost the revenues of oil and gas extraction companies, such as major producers and independent operators. This sector could see enhanced profitability due to higher production levels, especially if global oil prices stabilize or increase due to reduced regulatory constraints on exploration and drilling. These companies are analogous to the people panning for gold in 1849. Energy Equipment and Services: Companies that provide drilling equipment and services, including engineering and consulting firms, are expected to benefit from increased demand as drilling activities ramp up. These companies are analogous to the shovel sellers of the gold rush in 1849. Industrial Sector Manufacturing and Construction: The policy will increase infrastructure development, particularly in energy-related projects such as pipelines and refineries. This could benefit construction firms and manufacturers of industrial equipment. Steel and Materials: As energy companies expand their operations, there will be a heightened demand for steel and other construction materials. Financial Sector Banks and Financial Services: With increased activity in the energy sector, financial institutions that provide loans and financing to energy companies may see a boost in business. Higher interest rates could also enhance their profit margins, benefiting this sector. Sectors to Short Renewable Energy Solar and Wind Energy Companies: The Trump 47 administration's increased focus on fossil fuel production will probably divert investments away from renewable energy sources. Companies in the solar and wind sectors will get less funding and support, hindering their growth and development as the administration prioritizes oil and gas. Electric Vehicle (EV) Manufacturers: Trump's intention to repeal the EV mandate and reduce incentives for electric vehicles could adversely affect EV manufacturers. This sector has been rapidly growing, and a shift back to fossil fuels could stifle innovation and market expansion. Environmental Services, Advocacy, and Finance Environmental Consulting Firms: Companies that provide environmental assessments and compliance services may see a decline in demand as regulations on drilling and emissions are rolled back. This will reduce business opportunities and revenue for firms focused on sustainability. Non-Profit Organizations: Environmental advocacy groups will face challenges in promoting clean energy and combating climate change. A shift towards fossil fuels could undermine their initiatives and funding. Green Investment Funds: Funds focused on sustainable and green technologies will see capital flows shift out of their backyard into fossil fuel projects. Wrap Up Jim T., thanks for the question. I hope I have answered it sufficiently. Have a great weekend! All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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