By J. Bradley Jansen
The time has come to get our financial situation in order. I’m not talking about the pros and cons of another stimulus or if the Bush/Obama plans “worked” or not, but a more substantive proposal. Let’s get some of our gold back from the International Monetary Fund, monetize it, and put it in the Social Security Trust Fund.
My colleague Robert Naiman suggested we cut our IMF funds when they suggest cutting Social Security benefits. (He and I worked together opposing the IMF quota increase several years ago.) His idea was in response to Dean Baker’s article, “The Attack of the Real Black Helicopter Gang: The IMF is Coming for Your Social Security.” I think we should call it the “Anti-Geithner Plan” in honor of the “Washington Consensus”/US Treasury/IMF/New York Federal Reserve maestro.
Here’s my proposal: let’s cash in some of our SDRs from the IMF and “restitute” our Bretton Woods gold back. The money came form the generation of taxpayers that are now depending on their Social Security checks. According to the IMF,
Restitution. The Articles also provide for the restitution of the gold the Fund held on the date of the Second Amendment (April 1978) to those countries that were members of the Fund as of August 31, 1975. Restitution would involve the sale of gold to this group of member countries at the former official price of SDR 35 per ounce, with such sales made to those members who agree to buy it in proportion to their quotas on the date of the Second Amendment. A decision to restitute gold requires support from an 85 percent majority of the total voting power. The Articles do not provide for the restitution of gold the Fund has acquired after the date of the Second Amendment.
Our gold held at the IMF was deposited there at SDR35/oz and held on the books there at that rate so there would be only a simple accounting transfer at the IMF with 35 SDRs from one side of the ledger to the other. The IMF has not returned my calls or emails questioning exactly how much this would be under the first Articles of Agreement. With gold now at 35 times the $35/oz when it was deposited, the Social Security Trust Fund could have reaped a sizable profit on its investment. (If the IMF does not vote to restitute our gold, we should give our six month notice and unilaterally withdraw taking our gold with us.)
We could then monetize our IMF gold into gold bonds under the plan floated by Alan Greenspan in his September 1, 1981 Wall Street Journal article “Can the US Return to a Gold Standard.” The gold bonds should then be deposited in the Social Security Trust Fund to offset the demographic time bomb as well as the soft default of the fund by the impending inflation (in the classical sense of the economic term) by the Bush/Obama deficits.