Sell off Uncle Sam’s treasures

Tax cuts that will leave a hole of $1.5 trillion in the federal budgets of the next 10 years are in the headlines.

This would be piled on top of deficits that are already baked in the financial cake of $10 trillion in the same decade.

Gold buyers point this out and say buy more gold.

That could be a wise precaution for all of us.

However, if you think it important that some control be exerted on the national debt, the time has come to consider asset sales.

I don’t see any serious support for selling off the 260 million ounces of gold held by the federal government, but it might be necessary.

Such a sale would raise $329 billion at today’s Kitco gold quote.

Another possibility is sell shares in the Federal Reserve.

It has a balance sheet of over $4 trillion. It turns over about $100 billion in profits to the Treasury annually.

What would America’s central bank bring on the New York Stock Exchange?

If you give a market multiple of 24 to the central bank, its equity would be worth $2.4 trillion.

I doubt the government would give up control. Let’s say it keeps 51 percent so it can continue to do whatever it wants with monetary policy.

That 49 percent public share would be worth $1.176 trillion.

The owners would be entitled to 49 percent of the profit.

That current $49 billion turned over to shareholders would be a yield of 4 percent.

With continued inflationary monetary policy, the dividend and the equity would also continue to grow subject to the usual ups and downs of profitability and markets.

Add the two figures together and you would arrive at a figure of $1.505 trillion.

This would cover the added cost of the tax cut proposal.

Before this is done, someone would need to figure out both the upside and downside of a central bank 49 percent in private hands.

A federal government shorn of gold?

How would that work?

To keep some gold for longer, it could use the gold to back a new series of federal bonds.

Offer 100-ounce certificates payable in 50 years with an annual payment of one ounce of gold as interest.

Who knows how such certificates would be valued. They might get multiples of the price earned by simply selling off the gold.

Then there is the U.S. Mint.

Why not sell off the Mint as European countries are doing?

If a cashless society is coming, a Mint would not be needed.

This implies a value of zero sometime in the future.

Wouldn’t it be better to tap the Mint’s current value and sell it on the open market before it goes to zero?

Of course, it might not drop in value to absolute worthlessness.

The Mint has a bullion coin business that would presumably continue.

Coin collectors would probably buy sets of new coins that are no longer used in circulation. Why? Well, we do that now, don’t we?

Presidential dollars, Native American dollars and Kennedy half dollars have been major products in recent years.

Selling the Mint would not raise sums remotely comparable to selling off gold or the Federal Reserve.

It turned over $61 million to the federal government in the most recently available report, but I will bet that there are collectors like me who would love to say we own the Mint.

Wouldn’t it be great to have a Mint director who answered to shareholders?

These are just the numismatic-related ideas for coming up with extra funds for the federal government.

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper "Numismatic News."

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