The US Treasury has a $216 billion slush fund that was created by confiscating gold in 1933
Money stolen after the greatest bank run ever is used to stop the current bank run
Today is the Monday after two major US banks, Silicon Valley Bank and Signature Bank, collapsed and were taken over by the Federal Reserve. To shore up the banking system, the US Treasury announced:
'... a loan program that will allow other banks to easily access capital “to help assure banks have the ability to meet the needs of all their depositors.”
The Bank Term Funding Program (BTFP) will offer loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging US Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. Banks will be able to borrow against their assets “at par” (face value).
According to a Federal Reserve statement, "the BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.”
The US Treasury will provide $25 billion in credit protection to the Fed from the Exchange Stabilization Fund.
This will ostensibly help banks avoid the situation that brought down Silicon Valley Bank.'
Most Americans have never heard of the Exchange Stabilization Fund. So, what exactly is the Exchange Stabilization Fund (ESF)? How much money is in it? How did the government get this money in the first place?
The official statement about the ESF is short and opaque:
'The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and Special Drawing Rights (SDR) assets, and to provide financing to foreign governments. All operations of the ESF require the explicit authorization of the Secretary of the Treasury ("the Secretary").
The Secretary is responsible for the formulation and implementation of U.S. international monetary and financial policy, including exchange market intervention policy. The ESF helps the Secretary to carry out these responsibilities. By law, the Secretary has considerable discretion in the use of ESF resources.
The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that "the Department of the Treasury has a stabilization fund …Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.'
Pay particular attention to the phrase "... the Secretary has considerable discretion in the use of ESF resources." In other words, it's a slush fund used by the government for pretty much whatever it wants to do.
According to the amusingly precise numbers released in the January Financial Statement, as of January 31, 2023, there was exactly $216,347,604,697.14 in the ESF.
Wikipedia has a carefully phrased description of the origin of the ESF:
"The U.S. Exchange Stabilization Fund was established at the Treasury Department by a provision in the Gold Reserve Act of 1934. It was intended as a response to Britain's Exchange Equalisation Account. The fund began operations in April 1934, under director Archie Lochhead and financed by $2 billion of the $2.8 billion gold surplus the government had realized by devaluing the dollar."
So, how did the government get this $2.8 billion surplus in 1934?
"The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. It also prohibited the Treasury and financial institutions from redeeming dollar bills for gold, established the Exchange Stabilization Fund under control of the Treasury to control the dollar's value without the assistance (or approval) of the Federal Reserve, and authorized the president to establish the gold value of the dollar by proclamation.
Immediately following passage of the Act, the President, Franklin D. Roosevelt, changed the statutory price of gold from $20.67 per troy ounce to $35."
“A year earlier, in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins.”
The federal government confiscated all of the gold in the US, then revalued the dollar at a lower value, and pocketed the difference. President Franklin D. Roosevelt more or less stole this money from the people, which is one reason why the language that is used to describe this action, and the fund itself, is intentionally opaque and confusing.
Let's connect all of dots in order to realize the sheer audacity of the actions of the US government over the decades.
During the Great Depression, many banks failed and the economy crashed. The government confiscated all gold and paid $20.67 per ounce for it. In 1934, the government revalued gold at $35 per ounce, pocketed $2.8 billion, and used $2 billion of it to create a slush fund. By January 31, 2023, the slush fund grew to hold $216 billion, plus $347,604,697.14 in loose change. In March 2023, two banks failed and sparked fears of another Great Depression. The Federal Reserve created a new program to loan money to banks that are in trouble, and the US Treasury issued a $25 billion guarantee of the program, backing it with the slush fund created by confiscating gold after the massive bank failures in the Great Depression.
Anybody who owns gold should remember that the government has shown by its past actions that it is willing to confiscate their property, give them paper dollars instead, devalue the paper, keep the profits, and then create a slush fund to allow the President to bypass the right of Congress to appropriate funds from the Treasury.
We keep repeating the same mistakes and applying the same schemes, and we never seem to learn from them.
At this point, it's appropriate to quote George Santayana:
"Those who cannot remember the past are condemned to repeat it."
And, to also quote Narcotics Anonymous:
"Insanity is repeating the same mistakes and expecting different results."