Treasury bond that pays you back, in dollars, the gold price after a certain number of years. Tie borrowing to gold without having to have convert to gold.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Wed Mar 12, 2025 7:52 am
by ochotona
Judy Shelton was interviewed, and she keeps bringing up the idea about gold back bonds. And 0% inflation target instead of constant currency debasement. She mentions other badly need Fed reforms... not paying interest on bank deposits at the Fed, where banks make 4% on billions of Dollars of T-Bill, being paid to do NOTHING.
It would be great if she were to become Fed Chair.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Wed Mar 12, 2025 10:47 am
by yankees60
ochotona wrote: ↑Wed Mar 12, 2025 7:52 am
Judy Shelton was interviewed, and she keeps bringing up the idea about gold back bonds. And 0% inflation target instead of constant currency debasement. She mentions other badly need Fed reforms... not paying interest on bank deposits at the Fed, where banks make 4% on billions of Dollars of T-Bill, being paid to do NOTHING.
It would be great if she were to become Fed Chair.
I'm missing why banks should not be earning money on their deposits?
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Wed Mar 12, 2025 5:09 pm
by Jack Jones
When the dollar was backed by gold, bonds were already gold bonds.
It would be cool to have your employment contract priced in gold.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Wed Mar 12, 2025 5:22 pm
by dualstow
Jack Jones wrote: ↑Wed Mar 12, 2025 5:09 pm
When the dollar was backed by gold, bonds were already gold bonds.
It would be cool to have your employment contract priced in gold.
That reminds me, I read that originally a Dutch gilder was equivalent to a day’s work. Back then there more woodcutters and not too many IT professionals, but I loved the idea of it.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Wed Mar 12, 2025 5:26 pm
by Xan
Jack Jones wrote: ↑Wed Mar 12, 2025 5:09 pm
When the dollar was backed by gold, bonds were already gold bonds.
It would be cool to have your employment contract priced in gold.
Well... Sort of. There was nothing that guaranteed that the dollar would always be linked to gold going forward.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Thu Mar 13, 2025 4:29 pm
by ochotona
yankees60 wrote: ↑Wed Mar 12, 2025 10:47 am
I'm missing why banks should not be earning money on their deposits?
Because the social role for banks is to make loans to businesspeople so that they can invest in plant & equipment, hire employees, and create wealth in the real world.
Banks now apparently (according to Shelton) can park their reserves at the Fed, get paid T-Bill rates, and get money for nothing without fulfilling their societal role. It just becomes a Big Money Pots Rich Boy's Club. Welfare for the rich! The American Way!
They need an incentive to push the money out into the real world.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Thu Mar 13, 2025 11:46 pm
by boglerdude
2008 Fed printed billions and bought toxic MBS. Now the fed is paying banks 4.4% on that cash and the "pandemic" cash. Nice work if you can get it. What happens if they stop paying the banks? Bogleheads deleted my thread as too political and reddit deleted the replies
yankees60 wrote: ↑Wed Mar 12, 2025 10:47 am
I'm missing why banks should not be earning money on their deposits?
Because the social role for banks is to make loans to businesspeople so that they can invest in plant & equipment, hire employees, and create wealth in the real world.
Banks now apparently (according to Shelton) can park their reserves at the Fed, get paid T-Bill rates, and get money for nothing without fulfilling their societal role. It just becomes a Big Money Pots Rich Boy's Club. Welfare for the rich! The American Way!
They need an incentive to push the money out into the real world.
However, on the other side banks have deposits from both individuals / businesses / organizations.
They have a tiny fraction of that actually in the bank in the form of cash since most of it is going to be loaned out.
Therefore, they do need some form of reserves for liquidity purposes.
They are also out to make money. Therefore, their incentive would be more to make loans since those rates are much higher than what they would get from being paid T-Bill rates.
Re: Great Idea by Judy Shelton - Gold Bond
Posted: Fri Mar 14, 2025 11:32 am
by yankees60
boglerdude wrote: ↑Thu Mar 13, 2025 11:46 pm
2008 Fed printed billions and bought toxic MBS. Now the fed is paying banks 4.4% on that cash and the "pandemic" cash. Nice work if you can get it. What happens if they stop paying the banks? Bogleheads deleted my thread as too political and reddit deleted the replies
Yes, the banks would earn far more than that 4.4% via both making any form of loans and way more in the form of credit card debt.