Can a President make money out of thin air? On paper, yes.
Donald Trump and Elon Musk have been talking a lot about Fort Knox lately, the place where America keeps its official gold reserves. Both have said they’re gonna take a trip to the site soon to check it out and make sure the gold is there. According to Trump and Musk, they wanna make sure no one stole the gold. The reality behind the scheme may be something stupider and more dangerous: they know the gold will be there and know they can use it to create a Bitcoin reserve.
The idea that Fort Knox is missing gold is a well-worn Boomer Facebook conspiracy theory. Trump and Musk love those. On February 24, while meeting with French President Emmanuel Macron, Trump opined on the possibly missing gold. “We’re actually going to Ft Knox to see if the gold is there. Because maybe somebody stole the gold. Tons of gold,” Trump said during the appearance. Musk has been posting on X about the issue off and on over the past few days.
The gold is probably there. There’s a lot of it, and the chances that someone would ferret it away without anyone noticing are zero. Non-authorized personnel have gone into the vaults to inspect the gold only three times before. President Franklin D. Roosevelt went in 1943. Congress went with a group of journalists in 1974. In 2017, during the first Trump presidency, then-Treasury Secretary Steven Mnuchin visited with McConnell. There are pictures of the pair grinning like idiots, holding up gold bars, and signing their names on the wall.
But it’s the 1943 visit by Rooselvet that’s most instructive here and may hold the key to using America’s gold to jumpstart a strategic Bitcoin reserve. Which would, to be clear, be very stupid. This issue has been covered extensively and in-depth by Nathan Tankus on his blog, Notes On the Crises. To hear Tankus tell it, the Fort Knox trip is “a scam built atop an accounting gimmick wrapped in bullshit.”
It’s about the president making money out of thin air. The President has the authority to set the price of America’s gold. Roosevelt did this in 1934 after America went off the gold standard. At the time, the U.S. said the price of gold was worth $20.67 a fine ounce. Roosevelt said it was actually worth $35, and so it was. He created $2,819,000,000. It was a book-keeping trick, but one that allowed him to invest in the World Bank and International Monetary Fund. About a billion of it sat on the books and was used to avert the country’s first debt ceiling crisis in 1953.
When Trump and Musk visit Fort Knox, they’ll find 5,000 tons of gold sitting in gold bars. Gold that the U.S. currently values at $42 an ounce. Gold that would be worth $2,800 an ounce on the open market. With the wave of a hand, Trump could change the price of U.S. gold and inject hundreds of billions of dollars into the U.S. Treasury’s balance sheet. He has the authority; the Supreme Court says so. Roosevelt caused a constitutional crisis when he upped the price of gold in the 1930s. SCOTUS ruled in his favor in Perry v. United States. Trump may be served by the precedent.
And what to do with an $800 billion dollar windfall? Why, buy Bitcoin, of course. The idea to change the price of gold and use the cash to start a Strategic Bitcoin Reserve has been around for a while. Sen. Cynthia Lummis (R-WY) introduced a bill into Congress in the summer of last year called the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act.
Lummis’ Act would have the Treasury issue new gold certificates based on the current market price of gold and then use those certificates to buy up Bitcoins. Could this actually happen? It’s possible. We’re living in weird, stupid, and unprecedented times. The President says he’s planning to take the world’s richest man on a trip to Fort Knox. It’s possible that when they get there, they’ll say that the gold hasn’t vanished at all. They may say that there’s far more of it than they expected.
