TL;DR:  When crypto came along, we took a pass realizing it was a “purebred fiat.”  Now, open “Currency Wars” threaten. They may be a road to war. Meanwhile, Fannie and Freddie are singing the blues as delinquencies scream higher.  And what makes a great manager? building or Maintaining?

Currency War Arriving

Back when crypto was new and trading under a dime, a colleague suggested we price Peoplenomics subscriptions in BTC. “You could get maybe 400 BTC for a year,” he figured.  And he was right – bad move in some ways – but not all.

For while it’s true that one subscription would have generated what today would be just over $42-million (*BTC is $113,000 early today), I didn’t go there.  The reason?  I considered BTC  a kind of half-assed (and not even as good as) government made-up money.

Here’s how it all hangs together:

A fiat currency is (legacy definition) money declared legal tender by a government but not backed by a physical commodity like gold or silver; its value rests on the stability of the issuing authority and the public’s confidence that it will be accepted in exchange for goods, services, and debt repayment.

In contrast, cryptocurrencies aren’t state-issued but share a “pseudo-fiat” quality: they lack intrinsic backing, and their worth is derived almost entirely from collective belief, network trust, and scarcity rules embedded in code.

In practice? Both systems are abstractions—fiat is faith in governments and central banks, while crypto is faith in math and consensus algorithms—so crypto can be viewed as a privately-issued, decentralized cousin of fiat, with its own credibility anchored in adoption and transparency rather than sovereign decree.

Today – the “currency wars” are becoming clear.  Stablecoins that are trying to wrap up in the clock of “offishuldom” and traditional touchstones screams – witness $3,800+ gold overnight (futures price).

Repricing Gold: What It Could Do To U.S. Debt, Today

I rolled out of bed with one number stuck in my head: gold ripping through $3,808 overnight. That got me wondering what happens if we stop pretending our national stash (on the books at a lowball number) is worth $42.22 an ounce on paper and admit the world price is the price. So we asked AI… to run the math.

The Simple Math First

“Official U.S. gold is about 261.5 million troy ounces. At $42.22, that books around $11.0 billion. Mark that same pile to $3,808 and it pencils to roughly $996 billion. The delta—about $985 billion—is the “revaluation surplus” hiding in plain sight. On a $36 trillion federal debt stack, that’s ~2.7%. On a ~$28 trillion GDP, it’s ~3.5%. Per head (call it 335 million people), the paper lift is about $2,940 apiece.”

AI missed a nuance, sure. The GDP could be argued to be based on the (most recent) reported number of people actually working.  That changes things a bit: 163.382 million work slaves if you want to run the numbers that way.  Ultimately, everything’s on the working man’s back, so sure…

Paper Reality Versus Cash Reality

Important distinction: With the Current Account update today (in a sec.), a revaluation to real gold pricing wouldn’t magically pay bills. Unless Treasury sells metal or legally monetizes the surplus, it’s just an accounting change. But accounting changes can move mountains. Repricing could:

• Strengthen the sovereign balance sheet with a recognized equity-like reserve
• Improve debt metrics used by ratings desks and foreign reserve managers
• Open the door to structured instruments (gold-linked notes, swaps) without dumping a single ounce

How It Could Flow Through The Books

Mechanically, Treasury recognizes a revaluation reserve on its gold certificate account with the Fed. The Fed, in turn, carries a corresponding liability or capital cushion. We’ve already watched central banks treat gold as a mark-to-market reserve buffer; the U.S. simply never updated the 1970s sticker price. Flip that switch and you create room to:

• Absorb losses elsewhere on the Fed/Treasury complex without optics of “taxpayer bailouts”
• Collateralize targeted issuances (infrastructure, strategic stockpiles) with a gold-value backstop
• Facilitate bilateral settlements in gold terms with allies while keeping the metal vaulted at home

Why This Matters Now

Context is everything. Saudi Arabia signaling oil-for-gold capability inside the Kingdom, BRICS pushing a non-dollar settlement lane, and nuclear guarantees floating around the Gulf aren’t just geopolitics—they’re settlement politics. If oil can clear against bullion, then bullion’s price becomes the center of gravity for energy trade finance. For the dollar to hold court, acknowledging true reserve strength helps.

And just to keep “sticky fingers” away, the Saudis are posting “no trespassing” signs.  Like this one: Pakistan, Saudi Arabia nuclear agreement | The Jerusalem Post.

Three Monetization Paths (Without Selling Ounces)

Hmm…what could Uncle do to spice up our books, but still hoard our own sparklies?

1. Revaluation Account + Gold-Cert Backing
   Recognize the ~$985B surplus and authorize the Fed to issue special gold certificates to Treasury against that value. Proceeds retire a slice of high-coupon debt. The metal never moves; the certificate is the bridge.

2. Gold-Linked Term Notes
   Treasury floats a small, transparent program of notes indexed to the official gold price (now marked-to-market). Investors take currency and duration risk with a hard-asset tailwind, reducing rollover pressure in other tenors.

3. Bilateral Clearing Lines
   Stand up capped, swap-like facilities with key trade partners. Settlement netting references the official U.S. gold mark but clears in dollars; gold is the numeraire, dollars do the plumbing. Confidence goes up, not metal outflows.

Timing could be a bitch, though.  There’s the matter of what the “fair price” of gold would be in a world market that somehow rediscovered even the partial use of gold?

What’s a Fair Global Gold Price?

If the whole world went back onto a gold standard, the “fair” price of gold would depend on how much money is circulating (global M2 or M3) versus how much physical gold is above ground and available to back it.  Here’s some rough math:

• Global above-ground gold: estimated ~210,000 metric tons, or about 6.75 billion troy ounces.

• Global broad money (M2/M3 equivalents): ballpark $110–120 trillion (2025 figures).

Divide one by the other and you get:

• $110T ÷ 6.75B ounces ? $16,300 per ounce.

• If you used the higher side of M3 or shadow money (~$150T), you’re closer to $22,000 per ounce.

Of course, not all gold is available (jewelry, private holdings, central banks hoarding), so in practice the “working float” is smaller and the required backing price could be much higher. If only half of world gold were mobilized, you’d be in the $30,000–40,000 per ounce range.

So a “fair” global gold-standard clearing price today isn’t $3,800—it’s probably $15,000–30,000 per ounce, depending on how strict the convertibility is and whether fractional reserve practices were tolerated.

Long-time Peoplenomics readers will already be alert to this coming – it had been an obvious possible outcome for a very long time.  It likely had a lot to do with the U.S. attacks on, oh, Libya for example. (Oh, how soon we forget, huh?)

Muammar Gaddafi proposed a pan-African, gold-backed currency called the “gold dinar,” which aimed to free the continent from the US dollar and European financial influence. His assassination in 2011 occurred amid a military intervention and conspiracy theories that the plan threatened Western economic interests, particularly those of France. The project never came to fruition.  U.S. actions cut that (and Gaddafi) off at the knees.

Wasn’t time yet.  Now?  Gold MIGHT be starting on a Great Move.  The kind that generational wealth is founded on.  This is not advice – call it gadfly speculation.

The Catches I Can’t Ignore

Legal Plumbing isn’t in place – yet
The Gold Reserve Act era scaffolding and the Treasury–Fed gold certificate relationship would need updates. Congress would have to bless any monetization of revaluation gains.

Signal Risk – prices could triple
Repricing can be read two ways: prudent modernization—or admission the fiat era is fraying. Messaging is everything. Done clumsily, it could goose inflation expectations or invite a speculative gold moonshot.

Encumbrances And Audit Chatter
Skeptics will ask about leases, swaps, and the perennial audit drumbeat. Even if every ounce is where it should be, markets will demand pristine disclosure if you’re going to count it at world. And those people calling for an “Audit of Ft. Knox” (and West Point – 54 million fine there)?

Feedback Loops and Long Tail Nightmares
Raise the official mark, lift gold’s perceived floor, pull more central-bank buying in, push the dollar down a touch—rinse, repeat. There’s a sweet spot where credibility rises without spiking commodity inflation. Finding it is an art.

The “Und zo?” Now What?

If the petro-dollar is drifting toward a petro-gold option set, the smartest defensive move is to modernize our own gold accounting. A clean, conservative revaluation—paired with crystal-clear rules on what the surplus can and cannot be used for—adds ballast to the dollar without sacrificing flexibility. I’m not arguing for a gold standard; I’m arguing for honest books in a world that’s repricing settlement risk in real time.

The valuations – off the books – are crooked, but it would be nice for small-time clowns like me, still working on my first junior quant badge – to see the numbers tie up neatly.

Eyes On The Signals

Any U.S. hint of reviewing the official gold valuation Saudi progress on domestic vaulting and oil-for-gold term sheets BRICS currency mechanics that reference bullion implicitly or explicitly
Treasury’s tenor mix at auction if gold keeps pressing higher Fed balance-sheet footnotes for treatment of gold certificates

Bottom line: at $3,808, the United States is sitting on a silent trillion in unrecognized reserve value. In a currency war, you don’t leave your best armor painted invisible. You roll it out—carefully.

Sorry to make this such a long discussion (it’s more like a Peoplenomics report except no 20-odd charts come with it).  But it’s the kind of “deep noodle” we like to do whilst puttering and doddering which is what seniors do.

Current Account

Looking for tariff impacts, are you?

The U.S. current-account deficit narrowed by $188.5 billion, or 42.9 percent, to $251.3 billion in the second quarter of 2025, according to statistics released today by BEA. The revised first-quarter deficit was $439.8 billion. The second-quarter deficit was 3.3 percent of current-dollar gross domestic product, down from 5.9 percent in the first quarter.

Michelle Bowman – Fed Gov whose work is level-headed – talks later this morning – could be good.

War Mein Noodles?

Well, a different kind of noodle, but sure…if you insist, Do pardon our cultural insensitivity when comes to noodles and cultural expropriation.  “Wor mein” (or “war mein”) is a Cantonese term for soup noodles served in a deep pot, meant for sharing, and is an older name for dishes that have mostly been replaced by modern alternatives like “wonton mee”

Yum, but let’s stick with the War part: Trump, Zelensky to Meet Today at UN, as Security Council Gathers to Confront Russian Escalation,

Per our libretto, Poland is likely next in play. And oh look! Poland will shoot down objects in clear-cut airspace violations, prime minister says.  Which puts Poland in the same foxhole as Estonia UN Security Council discusses Russia’s 12-minute Estonian airspace breach.  they don’t have a common border, though.  And what were all the drones doing in Copenhagen? Copenhagen and Oslo airports shut down after ‘large’ drone incident.  Flying out danish?

Then there’s War Mean: Mike Waltz warns US will defend NATO after Russian jets enter Estonia. And we will be keeping an eye on UN latest: Trump to speak at summit; Iranian officials banned from luxury shopping.  Can he stick to a script and watch the clock?

Noise Surfing

My consigliere called me up yesterday to report “I knew you’d want to be among the first to know Jimmy Kimmel is back.”

“Is this a crank telemarketing call?” I quickly asked.

“No, I’m serious!”

“Since you’re throwing in with liberals, send your check to PO Box 680080  Corona, NY 11368.”

“What’s that?“

“AOC campaign office – I’m sure they’d love a check. New polling shows AOC’s favorability for a potential presidential run | CNN Politics.  Elaine and I are sending five-bucks with a note, “To be used to buy on a one-way ticket to Venezuela…” 

(rimshot)

Trump Bash du Jour:  In the crazy-liberal Northeast Daily we see Trump Issues Warning Based on Unproven Link Between Tylenol and Autism – The New York Times

More than meets the eye? JUST IN: Patel reveals FBI investigating ‘theories’ surrounding Kirk assassination.

Deep read suggested of? The War on Masculinity: What the Data Really Shows.

Around the Ranch:  Builders vs. Maintainers

Been meaning to mention a conversation with son G2 last weekend.

“You know, dad, there are two kinds of people I run into up here (he’s the medical guy on big server farm builds).  There are Builder and there are Maintainers.  You’re a Builder personality.”

What followed was a great conversation about personal styles and how some people are really great at building new things.  But, when it comes to maintaining them at a high level?  Well, not so much.

“Take your shop for example…”

Yes, I am working on my personal museum of every cool tool for a home shop you can think of.  But, like the (2) CNC Machines, I haven’t cranked anything out on them for a long time. Same with the small wood lathe. Not a lot of application for that…kid was hitting close to home.

“On the other hand, I am more the Maintainer type.  Works in safety and healthcare, right?  I pick my biggest three objectives of the day and work my short list.  You have the longest project list of anyone I’ve ever met…”

And so it is… Yep, I am a “builder” and he’s got a foot in each camp.  But lots of “maintainer” because his office is always squared away, floors washed and polished – and he slams it all into “daily routines.”

I’ve heard of those.  But other than for necessary things – preflight checklists when flying and such, I’m more the builder type.

So, which are you? Maintainer type?  Ever push back an oil change?  Builder type?  Ever push back lunch or other meals so you could “Get this one more thing finished when building something…”

Useful distinction, too, investing.  Depending on where a company is in its life-cycle, the best CEO choice (or senior manager) might be a builder OR could be a manager.

Neat lens to use.  You’re welcome to borrow it, but just be sure to put it back when done.  I sure as hell won’t…

Thy Wills Be Done

Elaine and I popped into town Monday and signed the updated versions of our wills. Hadn’t changed since 2012 but now they have.

I think (subliminally) one of the reasons I don’t do the “every five years” on Wills is 1) because I am not a maintainer.  But 2) because having a will I worry could be a subliminal message “It’s OK to die now…”

No, it’s not.  Too many things on the to-do list to get done first.  Wait – does this mean builders build trying to outrun the inevitable?

95F and will feel like 103+ in the wilds of East Texas today with humidity cranked up.  Big temp drop and rain tomorrow – and from there? We are back into pot roast weather.  Good for the soul, not so much for cholesterol but we were just talking about inevitability, right? Pass the gravy.

Write when you get rich,

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