The Federal Government’s $128 Trillion Stockpile: The Answer to Our Debt Problems?

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The debate over federal government deficits and debt has consumed Washington for some time, but the arguments for the most part have focused on taxes and spending. One aspect, however, of the debate of American creditworthiness that doesn’t get discussed is what assets the federal government owns. After all, a borrower’s assets should be one of the main factors in determining the wisdom of its borrowing, but when talking about the U.S. government’s debt burden, it seems to get left out of the conversation entirely. And a recent report from the Institute for Energy Research (IER) makes some startling claims about how much U.S. taxpayers own in real assets. According to the report, the U.S. government owns:

  • More than 900,000 separate real assets covering more than 3 billion sq. ft.
  • Mineral rights, on and offshore, covering 2.515 billion acres of land, more than the total surface land in Canada
  • 45,190 underutilized buildings, the operating costs of which are $1.66 billion annually
  • Oil and gas resources on and offshore worth $128 trillion, roughly eight times the national debt of the country

The IER is a think tank that advocates for deregulation in the energy industry, so we should perhaps take these numbers with a grain of salt. Any estimate of oil and mineral wealth in unexplored areas is going to be highly speculative, but even if the true figure is half what the IER estimates, the fact that the federal government owns property worth well in excess of its total debt is instructive in our current debate over government borrowing.

But the federal government owns much more than just land and the minerals and oil beneath it. The federal government also has a very sizable stash of gold. In fact, at 261,498,926.247 oz., it’s the largest in the world. And, in case you haven’t noticed, gold is quite popular among investors who fear the debasement of government currencies in this era of worldwide, aggressive monetary stimulus. At the going rate of $1,660 per ounce, that stash is worth nearly $442 billion. Ever since Richard Nixon broke the link between the dollar and gold in 1971, there’s has been no official justification for sitting on all this gold. And some of it could easily be used to pay down the debt or put toward neglected projects like infrastructure.

And finally, another big chunk of federal assets come in the form of student loans. According to the Federal Student Aid, the office in the Department of Education that manages the federal student-loan program, the feds own $948 billion in outstanding student loans. This appears to be the face value of these loans — the actual market value is probably lower since a portion of these loans are in default and may not be paid back. But the market value for these loans is most likely in the hundreds of billions of dollars, and the performing loans in the portfolio could be sold off to other financial institutions.

There are obviously other factors besides raising revenue that would go into a decision to sell these assets. The federal government has an interest in protecting and preserving America’s environmental assets, and the Department of Education’s student-loan program is there to help young people access higher education. Selling off those assets would potentially put those policy objectives at risk. But the reason the federal government still holds on to so much gold is a bit more difficult to understand. With gold prices so high, it probably makes sense to unload at least some of it.

More than anything, these assets partially illustrate why the world is still so eager to lend the U.S. money. Despite all the doom and gloom you hear about the decline of America’s creditworthiness, it’s still a very rich country in both productive capacity and industrial and natural resources. And the financial crisis and demographic shifts that have caused our budget problems are either temporary effects or problems that could be solved by a mature discussion about priorities.

26 comments
MitchC
MitchC

The gold stockpile is an essential part of confidence in the US dollar, don't be naive

The global elite want to strip America of every resource and perhaps are ready to command an army elsewhere

Maybe they are discouraged that US citizens would rather use US funds and resources for US citizens

US citizens need to be educated because the elite are quick to abuse the power of advanced knowledge

The United States must have a firm handle on global power dynamics, evil to emerge a leader in a future 

Making companies global to avoid taxes, openly denouncing US citizenship is madness that only global 

connections and a pile of gold could make--- I'm proud to be an American 

JakeKilroy
JakeKilroy

Delusional?

Think the Federal Government is capable of having that $128 trillion pop up out of the ground and into the Treasury for free?Even If it did, that would just cover the $126 Trillion in unfunded liabilities.

And,I would endorse "giving you for free"  .....the 45,190 underutilized buildings, the operating costs of which are $1.66 billion annually.......When is an asset an asset, Chris, and when is an asset a LIABILITY?


How much would you pay for the PRIVILEGE to Lose, $1.66 billion per year. Or, do you think those building are sitting "underutilized" because they are prime properties in pristine shape with people begging to use them. Do you recall the great real estate auctions of the 90's? When the government unloaded JUNK, to stop spending money to insure, protect, pay utilities and taxes and maintenance?  

Why do you think the Federal Government just GAVE Detroit and is giving other cities billions to demolish "vacant housing ASSETS"?  Go get a job in the real world for a year and then come back and re-write your lecture!

SuperTech86
SuperTech86

Selling of public property is exactly what the elites want.  it amounts to nothing more than increasing concentration of wealth.  only fools would think this is a "good" idea.

blaylocks
blaylocks

One thing that this article leaves out that is worth mentioning. Who is going to buy all of these assets? Currently the Gross World Product, (GDP for the entire world) is at $69 Trillion Dollars. So the US decided to pay off the debt this year by selling assets the world would need to spend 1/4th of its earning power to pay of the US debt. Even if you were to take a 10 year approach this issue, I think that the US would struggle to find enough buyers to purchase that volume of assets.

Along those same lines, the prospect of having foreign powers owning such a large part of the US should be a little scary from a sovereignty issue.

TeddyHunt
TeddyHunt

If you pay attention, you will notice that our 128 trill in assets is being held in reserve. Other countries can pump the oil (like bp) so its basically in reserve for other countries.  Evidently when Russia, Britain and others pump our oil , it comes up green.  When evil americans  (the kind Obama said he hated) pump oil, its comes up yucky black.

Some people think  its possible the Rothchilds who control most central banks, financed the center for global warming in London. The people who think that are in jail. (wikileaks). So  Bp spills oil, years later only the brits can pump in our reserves. Really doesn't make sense does it? Since the spill, only Bp and its partners are given pumping permits by Obama. The solution according to the youngest rothchild is abandon all sovereign currencies and let the world bank issue carbon credits. Britain will pump the oil and share the profits with the world... yeah sure. Anybody remember the East India trading company? Why cant americans pump the oil they own again?

BrannonCarroll
BrannonCarroll

I once owned a boat. Hard times hit and money got tight. I had to sell my boat. I hated it...but it had to be done. One day, when I am in a better financial situation I will buy another one.

wayneveale
wayneveale

Ha! Thats just pathetic. I like the trillion dollar coin solution better. America are officially a punchline.

notLostInSpace
notLostInSpace

This is an excellent article.   We have tons of assets besides these.  We could have signing rights for national parks (the Liberty Mutual Statue of Liberty)...just kidding, but we really do have plenty of underused and under utilized assets that can be sold off.  Why do we need all that gold?  No one is going to the gold standard (sorry Ron Paul).  And the oil rights could be auctioned off a little here, a little there and still have plenty left while reducing our debt percentage.  We really do have the wealth to pay for the things we need, and dream for too.

chetrandom
chetrandom

Let me repeat that last line: "Despite all the doom and gloom you hear about the decline of America’s creditworthiness, it’s still a very rich country in both productive capacity and industrial and natural resources. And the financial crisis and demographic shifts that have caused our budget problems are either temporary effects or problems that could be solved by a mature discussion about priorities."  All this talk about how our DEBT is hurting us is really a big smokescreen to cover the Repugs agenda to obstruct fiscal efforts to get us out of this recession.  Just to make Obama and those pesky liberals look bad, in spite of all the unemployed and regardless of the fact that our GDP would increase by one $Trillion with the economy back on track, which would allow us to deal with debt issue WHEN WE HAVE THE MEANS!  This is not rocket science, it's simple arithmetic.


TomPiper
TomPiper

If you were to look at the federal government like any corporate or individual borrower whether from an asset or revenue standpoint the U.S.A. is golden.

However, the Republican debt isn't really about debt it's about returning this country to the pre-depression economic system of laissez faire capitalism. The fact that system was a constant cycle of boom and bust is irrelevant to the folks who want its return.

RobertBrennan
RobertBrennan

I like the idea of selling a portion of these assets to pay for things like infrastructure or even the Baby Boomer SS drain but once you sell off your grandma's jewelry it's gone for good. Therefore borrowing against these assets as collateral is something this congress needs to better understand. 

KurtSchoedel
KurtSchoedel

The legacy media is finally starting to trip to what my friends and I have been saying for the past 10 years. This is precisely the reason why I do not worry about U.S. sovereign debt. These assets will eventually be auctioned off, starting around 2020 and completing probably around 2040-2050 or so. By then we'll have immortality, thus making the "old age" entitlement programs obsolete.

sixtymile
sixtymile

That's pretty neat, but if we buy the petro-resources from ourselves to payoff federal debt in a deficit budget cycle, exactly how does that help? I guess it cheers up our creditors...

easyed
easyed

Mature discussion about priorities. . . . that's a good one.

JonathanMartin
JonathanMartin

Nations love to hold gold because they understand what the average person does not: that it is real money

JakeKilroy
JakeKilroy

@SuperTech86  Delusional?

Think the Federal Government is capable of having that $128 trillion pop up out of the ground and into the Treasury for free?Even If it did, that would just cover the $126 Trillion in unfunded liabilities.

And,I would endorse "giving you for free"  .....the 45,190 underutilized buildings, the operating costs of which are $1.66 billion annually.......When is an asset an asset, Chris, and when is an asset a LIABILITY?


How much would you pay for the PRIVILEGE to Lose, $1.66 billion per year. Or, do you think those building are sitting "underutilized" because they are prime properties in pristine shape with people begging to use them. Do you recall the great real estate auctions of the 90's? When the government unloaded JUNK, to stop spending money to insure, protect, pay utilities and taxes and maintenance?  

Why do you think the Federal Government just GAVE Detroit and is giving other cities billions to demolish "vacant housing ASSETS"?  Go get a job in the real world for a year and then come back and re-write your lecture!

Locke
Locke

@TomPiper What are you talking about?  There was nothing laissez faire about the pre-depression era, it was full of corporate/government handshakes, kickbacks, and corruption far worse than anything that exists today.  The boom and bust cycle has more to do with the emergence of credit availability, modern finance and increasing globalization.

And disagree all you want with the Republicans about how to deal with the debt issue, but nobody is seriously discounting the severity of the national debt.  Republicans are just misguided for thinking that cuts in discretionary spending (a relatively small portion of the budget) are the way to approach the problem, especially since it amounts to austerity on the kind of spending that provides relief to the worst off in times of recession.  The interest on the debt is growing at an alarming rate, however, and will increasingly constrain fiscal policy.  There are some who argue that more deficit spending now will grow the economy to generate revenues to pay down the debt, but those deficits also increase the debt.  Right now interest rates are artificially low.  When they return to historical norms, it won't be pretty.

Locke
Locke

@KurtSchoedel How is immortality the solution?  It's the living part that's expensive.  Dying is cheap.

notLostInSpace
notLostInSpace

@sixtymile How does it help?  It would help by reducing the amount of interest that has to be paid; and we would not have to sell all the assets, just some to get the budget in better shape.  Debt is not bad, only too much debt is bad.

TeddyHunt
TeddyHunt

@TomPiper  Supposedly to stablilize the economy we have borrowed 16 trillion, last years partial audit caught the fed printing an extra 16 trillion to bail out Europe. The federal government is presently 86 trillion behind in deposits to retirement funds and future welfare. So with an economy of 13 trillion. Total debt of 118 trillion . Overspending last year of 5.2 trillion. You don't see a massive BUST  coming?

All the central banks are buying gold and silver, but they tell you its a vast right wing conspiracy to buy it yourself. The fed has been buying its own bonds back for years , because all other countries know we are about to Bust wide open. But yeah you keep blaming the republicans. Keep thinking that capitalism and balanced budgets are evil. The government agencies will keep buying guns and hollow point ammo. (illegal in foreign wars). And don't forget to vote for biden and Hillary in 4 years!

blaylocks
blaylocks

@Locke @TomPiper I must disagree that Republicans are solely to blame for the debt issue. The real problem is entitlement spending (aka medicare, and to a lesser degree social security) are the real problem with the US debt. If you don't believe me look at this article http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html

The truth is that these programs were designed for a vastly different demographic than exists today. Social Security planned on having 16 workers pay for every retiree. When social security was enacted it was actually more likely that you would die, then you would retire (sometimes the truth hurts). Now only 3 people pay for every retiree witdrawing from social security. And in the next 20 years that will change to 2 people for every retiree. The truth is that program wasn't designed to handle the increasing life expectancy and decreasing birth rate. Medicare has the same problem, but to a much larger scale.

The problem isn't so much the debt that exists today, but the debt that is coming down the road. If you look at the deficit after the sequester, it actually didn't even amount to a speed bump in the road towards stopping the rising deficit. Within 5 years the deficits will be back to where they were before the sequester solely because of these entitlement spending.

It is frustrating because every politician who tries to address this issue is lambasted for harming our seniors. However, as someone in my 20's I would like these programs to exists when I retire. However they are going to be bankrupt far before then, and without seriously reforming how they work.

There have been a few proposals that would seriously help, but no one seems to listen. The first actually came from George W. Bush. He suggested that we give people the ability to invest the money they put into social security. Even if the program managed a 5% return, it would be enough to save it. However the AARP got involved, said that the American people were to stupid to invest their own money, and BOTH parties laughed at him.

Obama's Deficit Reduction Committee was actually had some really reasonable ideas on how to fix these programs, but once again they were ignored by the majority of both parties.

Last off, I must give credit to Paul Ryan. While his ideas for medicare may not be the best, at least he is willing to confront the issue. Even if he is hated by almost everyone for doing so.

If you want my opinion, Obama, currently, has the majority of the blame for this issue. The problem facing our country is big enough that we can't solve it with taxes. There needs to be reforms in these major programs to be successful. However anytime someone mentions even insignificant changes he parades around with grand speeches about how we are driving our seniors to financial ruin. However, in 20 years if this problem isn't solved then our seniors won't even have the shreds of these programs to hold onto.

JimDunbar
JimDunbar

@Locke @TomPiper that's the real problem. Interest on national debt. When interest rates finally go up, and they ill, bar the door. It ill be half. Tril to. Tril A YEAR.