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Germany’s Repatriation of Gold

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Germany has announced that it’s going to repatriate 374 metric tons of its gold that it has stored with the Federal Reserve in New York City. While Germany claims that it will continue leave 1200 tons of gold in the United States, this might actually be the start of a full removal of its gold and its return to Germany. In fact, Germany also announced a full repatriation of all 374 metric tons of its gold from France.

Why would Germany do that? It says that the reason is so that it can have plenty of gold reserves available at home in the event of a monetary crisis. The gold would enable Germany to purchase foreign currencies or, actually, most anything else, in the event of a crisis, reflecting, once again, that gold is real money.

But there is another possible reason for Germany’s decision: that it doesn’t trust the U.S. government. That’s, in fact, the reason why countries such as Libya, Venezuela, and Iran repatriated their gold. They were concerned that in a “crisis,” the U.S. government would seize it.

Fears of gold confiscation by the U.S. government are not irrational. After all, that’s precisely what the U.S. government did to the American people at the outset of Franklin Roosevelt’s presidency in 1932. Taking the path of communist and socialist regimes, the Roosevelt administration nationalized all private gold holdings in the country, ordered Americans to deliver their gold to the government, and made it a felony offense to own gold. Despite clear prohibitions against such action in the Constitution, the federal courts upheld the seizure.

While FDR’s gold seizure is now just something that Americans learn in history books, it is still one of the most shocking and appalling events in U.S. history. When the country was established, the Constitution made gold coins and silver coins the official money of the American people. Thus, for more than a century Americans use gold and silver coins, not irredeemable paper notes, as their medium of exchange.

Along came the Progressives, who succeeded in converting America to a welfare-warfare state, one in which the role of the federal government became a welfare caretaker for the American people and a brutal policeman for the world. Obviously, the welfare-warfare state would cost a lot of money, expenditures that would be easier to pay for if the government could simply print the money. That’s why Roosevelt and his statist cohorts decided to take everyone’s gold away and force Americans to use irredeemable paper currency instead.

The Germans know full well that the U.S. government could do the same thing again, especially if the right “crisis” came along, and that, this time, the confiscation could extend to foreign countries that have stored their gold with the Federal Reserve.

No one doubts, of course, that the U.S. government would do such a thing to countries that are not considered to be loyal members of the U.S. Empire, such as Iran and Venezuela, but would it really do such a thing to Germany?

The problem is that one never knows when a country will be converted from friendly ally to unfriendly enemy. In World War II, the Soviet Union was a friend and ally. Once the war was over, the U.S. national-security state quickly converted it to unfriendly enemy status, setting the Cold War into motion. Iran was a friend when the shah was in power. It is now an enemy of the Empire. Iraq was a friend under Saddam and then became an enemy under Saddam.

While Germany became an ally after it had been an enemy in World War II, there is no way to say with certainty that things will always remain the same. What if Germany were to demand that all U.S. troops leave Germany? What if Germany continues to grow more powerful economically while the United States continues to head toward economic bankruptcy? What happens if the Empire starts to see a prosperous, militarized, independent Germany as a renewed threat to world peace?

Then, all bets are off, and Germany knows that U.S. officials would have no compunctions about using Germany’s gold as leverage to impose its will on Germany. “If you want your gold, then do as we say.”

What about Americans?

American remain just as much at risk of gold confiscation as anyone else, if not more so.

As everyone knows, federal spending and borrowing continue unabated, and the federal government’s debt continues to soar. If there a drastic monetary crisis, like the one the Federal Reserve caused in 1929, and if federal officials desperately need money to fund their welfare-warfare-state operations, make no mistake about it: they will stop at nothing to get it. The two most likely sources of quick cash are (1) by confiscating gold again and (2) by confiscating people’s 401(k) retirement accounts, as Argentina did during its monetary crisis. Of course, the government would give people paper notes and bonds in return, as it did in the 1930s. Since U.S. officials would be running the inflationary printing presses at full force during such a crisis, the notes and bonds could be called “guaranteed instruments of confiscation.”

Thus, Americans would be wise to do what Germany is doing. Don’t store your gold under the auspices of the U.S. government. Bring it home and store it there.

 

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.