If You Are Going To Fix It, Do It Right – Or Not At All!
As a youngster, I spent summers on my grandparents’ farm. My grandfather, a grizzled WWII sergeant, had little time for nonsense. Television wasn’t invented. After supper the three of us would talk around the kitchen table. Many valuable life lessons are still with me today.
One of his favorites was, “If you are going to fix it, do it right – or not at all!” I remember asking, “What’s wrong with trying, even if you don’t get it done?”
His response – “Because you might make things worse. If the car is blowing black smoke, you can add oil, but eventually the engine will overheat and be destroyed. Overhaul the engine, and do it right.”
I’ve written about how, continuing on our current inflationary path, the value of the dollar will be destroyed. Congress and the Fed may “try,” but, without fixing the underlying cause, the dollar will overheat and die.
Roosevelt, facing a similar problem, confiscated all the gold, devalued the dollar, and created $3 billion out of nothing for politicians to spend. Today’s dollar is not fixed to gold or silver. If our current mess is to be fixed, how would they do it?
A clue perhaps?
Friend, and former colleague, Doug Hornig wrote about this possibility:
“What follows is speculative. But not entirely. There are hints, and recently one came from the Federal Reserve.
If you’re like me, you pay little or no attention to what the Fed says, since it has missed every major economic trend in recent history. Nevertheless, I couldn’t help but be intrigued by a paper—entitled, Official Reserve Revaluations: The International Experience. It was written by staff economist Dr. Colin Weiss and issued by the Board of Governors on August 1, 2025. The initial paragraph tells the story:
‘With public debt at high levels, some governments have begun to explore financing additional expenditures without raising taxes while also not increasing public debt outstanding. One possibility is using proceeds from valuation gains on gold reserves, as has been floated in the U.S. and Belgium recently.
For the U.S., this would involve revaluing the government’s 261.5 million troy ounces in gold reserves—the largest gold reserves globally— from a statutory price of $42.22 per troy ounce to current market prices, which stand around $3300 per troy ounce.” [Note: The price is more than 1/3 higher since then.]
Weiss doesn’t specify exactly where the idea has been ‘floated.’ But this paper is evidence it’s been talked about at least within the Fed. And probably inside the Treasury Dept.'”
Recalling my grandfather’s lesson, Doug grabbed my attention. Could this address the cause and truly fix the problem – or just make things worse?
When I asked Doug for an interview, he emphasized he has no inside information; his comments were speculation.
Doug and I are both older than my grandfather was. As two senior citizens, worried about the government fixing/breaking things, we agreed to speculate together.
DENNIS: Doug, on behalf of our readers, thank you for your time.
You outlined very well how politicians could possibly skirt rules, as Roosevelt did, revaluing the dollar. Today I’d like to discuss potential results; “If they are going to do something, do it right!”
Let’s start a timeline. The Federal Reserve was created in 1913, and soon we had the roaring 20, cheap money, followed by a collapse.
Recall Ludwig von Mises warned:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Roosevelt did his thing, confiscating gold and devalued the dollar.
He also addressed the cause, creating the FDIC to protect the consumer from bank failure. Congress passed the Glass-Steagall Act, restricting speculative banking activity. With the dollar still pegged to gold, government spending was somewhat curtailed – until Nixon removed our dollar from any gold or silver backing in 1971.
Lobbyists spent over $300 million to repeal Glass-Steagall in 1999. That unleashed another (von Mises warned) speculative spending spree, and collapse, with the Fed bailout of banks deemed “too big to fail.”
The money bailout was like adding oil, but no major overhaul. There is no restraint on government debt and spending today.
Doug, my first question. Revaluing gold might work; however, wouldn’t the first step be to make sure it’s still there?
DOUG: Dennis, thanks for inviting me. I appreciate all you do for us seniors.
Politicians like Rand Paul have been calling for an audit of the government’s gold for years. The last full, physical audit was in 1953.
Today, the Treasury Inspector General and the U.S. Mint say the gold is still checked annually through sealed inspections and accounting procedures, but not by re-counting every bar. That makes some observers suspicious. Why don’t they?
Sure, it’d be a lot of work. But doing it once every 70 years or so doesn’t seem like that much of a burden. It would certainly restore the world’s confidence in our solvency. Yes, an audit is definitely Step One.
DENNIS: Will revaluing gold, and doing nothing else, solve the problem? Without reinstating Glass-Steagall, wouldn’t it be easy to quickly find ourselves deeper in the mess?
DOUG: Revaluing gold to market value would result in the creation of around $1.2 trillion in new currency, conjured out of thin air at the Federal Reserve and placed in its Treasury General Account. It would then amount to a “cash” infusion that the Treasury could spend whatever it wants.
It wouldn’t come close to solving “the problem,” of the gargantuan federal debt. While they won’t do this, assume they took the entire amount to pay down the debt, it wouldn’t help much. That seems really bizarre to say, doesn’t it, since we’re talking over a trillion dollars? Yet it’s true.
Look at the US Debt Clock.
Current interest on our debt is over $1 trillion. It wouldn’t cover this fiscal year’s deficit—projected at around $1.9 trillion.
In a nutshell, they need to do more to address the cause for sure!
DENNIS: I was really intrigued when you wrote:
“So…what if the government’s gold were revalued to, say, $4500/oz. (Or, since it’s more or less accounting trickery, they could peg it to $5,000, or $10,000, or whatever price they wanted. …. What would be the consequences?
…. While it wouldn’t signal a return to a true gold standard, it would place a de facto floor under the gold price. Not a literal floor—unless the government began buying physical gold (which it might). But it would announce that the U.S. is implicitly pricing gold into its monetary base, and that the issuer of the world’s reserve currency is anchoring its balance sheet to gold. The yellow metal becomes important again.”
Doug, should the government go this route, in your opinion, could it curtail government spending, or would they be able to go hog wild?
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DOUG: The prospect of a trillion “free” dollars must be very alluring. Honestly, I have no idea why they haven’t done it yet. I believe they will.
One effect of revaluation would be downward pressure on interest rates and dollar devaluation which the current administration believes are good things that would stimulate exports and give a boost to GDP.
In my article I speculate that the real goal would be creation of a Sovereign Wealth Fund like Saudi Arabia has. Such a fund could generate profits that the government could then use to fund spending or pay down debt. It makes sense.
Shortly after his reelection, President Trump signed an executive order directing the Departments of the Treasury and Commerce to develop plans for an SWF, including “recommendations for funding mechanisms, investment strategies, fund structure, and a governance model.”
Treasury Secretary Bessent is also in favor. This looks like an obvious endgame to me. But you couldn’t count on it as a real fiscal breakthrough. If the Fund generated an optimistic 10% payout per year, that’d only yield $120 billion in profits, which is chump change in our current debt quagmire.
Historically the government will find a myriad of ways to spend the new currency, and they won’t include anything fiscally responsible, like paying down debt, or clamping down on the banking system. Glass-Steagall was a major cornerstone that worked for several decades.
DENNIS: One final question. Any adjustment will be painful as the dollar loses value. Chuck Butler and I encourage readers to hold gold. What are your thoughts?
DOUG: Gold is, and has always been, the ultimate insurance policy against currency debasement. I hold physical metal as a hedge against whatever financial disasters our rulers foist upon us. I have no intention of selling a single Eagle until I absolutely, positively have to.
DENNIS: Thank you once again.
DOUG: My pleasure Dennis….
Dennis here. Owning gold certainly helps individuals cope, but…. While today’s situation is more complicated than 1929, we can only hope they fix things right. Roosevelt kicked the can down the road for almost a century while reining in the banks and maintaining the gold standard.
Revaluing gold by itself, creating more phony dollars, is adding oil to an overheating engine. Reinstating Glass-Steagall and linking the currency to revalued gold is the necessary overhaul. As my grandfather said, “If you are going to fix it, do it right – or not at all!”
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On The Lighter Side…
The calendar has rolled over to June and summer is in full bloom here in the Midwest. A couple years ago I gave Jo a potted plant at Easter and she decided to plant it. It’s time to get some more, we really like it.
We have been back in Indiana for a couple of weeks and it has rained most of the time. The corn was peeking out of the soil when we arrived and, I’d swear, it’s a foot tall already. Barring a very hot, dry summer, farmers in this neck of the woods should harvest a bumper crop.
Last week I went to the cancer center and am happy to report all is well. I know this sounds crazy, but every time I go, I look around and see lots of people who appear to be younger than I am who are really struggling.
We had dinner with friends Chris & Steve last week. As I was driving home, I mentioned our ages range from 77-86. We are mobile, still have our mental faculties about us, three of us are happy to have been pronounced “cancer free” – our generation is truly blessed. Keep on keeping on….
Quote of the Week…
“For almost 200 years the US dollar was backed by gold or silver. Today the US dollar is an IOU from the Federal Reserve, not backed by anything. The emperor has no clothes….” —Dennis Miller
And Finally…
Subscriber Scott L. shares some clever puns:
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And my favorite:
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Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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