I want to crossreference this article about how deep this goes in regards to this part of the German gold article:
Another myth that has been making the rounds in nationalist-oriented German circles is that the US refused to hand over the treasure and threatened during the Cold War to withdraw its troops from Germany if the Germans demanded their gold back. Former Bundesbank head Karl Blessing, according to the theory, had to provide the US written confirmation that he would never do such a thing.
This letter, as it happens, actually exists, as Blessing confirmed in his last interview with SPIEGEL in 1971 -- except it doesn't concern the German gold, but rather US gold reserves. Until 1971, every dollar could be exchanged for the precious metal. Blessing thus promised the US Federal Reserve that he would no longer convert the colossal German dollar reserves to gold because this would have caused the currency's value to plummet.
Today, this historic document is even available online. But that hasn't silenced those who oppose stockpiling German gold abroad. Instead, the debate over a collapse of strictly paper-based currency is experiencing a renaissance -- as is the dispute over the gold reserves. Even Green Party financial expert Gerhard Schick has joined the fray: "I think the question of how much gold is available in an emergency is a valid concern."
Relevant article:
ABOUT THE BENJAMINS: Why the share of $100 bills in circulation has been going up for over 40 yearsSo what the heck is going on here? Inflation may have something to do with it—there just weren’t as many things to buy in 1970 that might require one to slap down a $100 bill—but that still wouldn’t explain why their proportion today has nothing to do with what people see in their wallets.
The short answer is that a lot of money is spending a lot of time outside the United States.
The cognoscenti look at the share of $100 bills as something of a proxy for foreign demand for US currency. An overwhelming majority of the $100 bills come from the Federal Reserve Cash Office in New York City, which handles the bulk of foreign shipments of US currency. A typical shipment is a pallet containing 640,000 such bills, or $64 million, according to a recent Fed paper.
Somewhat surprisingly, it’s unclear exactly how much American money is floating around outside the US. Estimates run the gamut. In the 1990s, one high-profile estimate pegged the number at as much as 70%. But more recent estimates hover around 25%-30%.
And while there are plenty of reasons folks outside the US might want to hold dollars, the thinking is that most people are not using these $100 bills to buy milk and bananas. No, most economists seem to believe $100 bills are most often used as stores of value—almost something like mini-Treasury bills that don’t pay any interest. This is especially so in developing countries, where problems with unstable currencies and inflation often mean the purchasing power of local currency gradually—or not so gradually—erodes over time.
pirate@40 all over again
