The numbers are frankly staggering and they're
really driving the whole fiscal conversation
right now. Absolutely. We are talking about the
US national debt. which, as of early September
2025, is sitting at roughly $37 .43 trillion.
It's almost an unimaginable figure. It really
is. And it kind of loses meaning until you break
it down, right? It translates to a debt burden
of about $110 ,020 for every single person in
the country. Or if you think about households,
it's something like $283 ,098 per household.
It's immense. And that debt isn't just Well,
a number on a page. No, not at all. The sheer
cost of just servicing that debt, the interest
payments, that alone is really starting to constrain
national priorities. How so? Well, it's eating
up a huge and frankly rapidly growing slice of
federal revenues. And that financial strain,
that pressure is exactly why policymakers are
being pushed to look at options that maybe just
a few years ago would have seemed completely
unthinkable. And that's really our mission today,
isn't it? We're going to dive deep into this
fascinating and let's be honest, highly unconventional
plan, it's multifaceted, designed to try and
tackle this massive physical shortfall. And it
leverages two really different, but maybe equally
powerful asset classes, the nation's historical
gold reserves. Right, the old standard. And the
government's more recently acquired, and let's
face it, highly volatile cryptocurrency assets,
specifically Bitcoin. Yeah, a totally different
beast. The stakes here are just huge, because
the success or failure of this whole strategy
seems to hinge entirely on whether they can manage
the market volatility of these assets. OK. Let's
unpack this. So maybe first, to really get why
this kind of unconventional approach is even
on the table, we should probably quickly touch
on how the debt normally works. Good idea. The
basics. Yeah. So the federal government, you
know, consistently spends more money than it
collects in taxes and revenue. That creates deficits.
Year after year. Exactly. And those deficits
have to be financed through borrowing. Primarily,
that means selling treasury securities, T -bills,
notes, bonds. And lots of different people and
entities buy those, right? Like individual investors,
big funds, even foreign governments. Correct.
All of those. But crucially, the Federal Reserve
itself is also a major buyer. Ah, OK. And when
the Fed steps in and buys up huge amounts of
that new debt, how does that actually work? Are
they just using existing money? Well, often no.
They're essentially creating new digital money
to make those purchases. It's electronic ledger
entries, basically. So printing money, but the
digital version. That's a simple way to put it.
Yeah. The technical term is often monetizing
the deficit. Think of it like the government
writes an IOU and the central bank creates brand
new money on the spot to buy that IOU. Okay,
I see. And I guess the benefit is it makes borrowing
easier for the government. In the short run,
yes, absolutely. It can help keep interest rates
lower than they might otherwise be, and it relieves
pressure on the treasury and the markets. It
provides liquidity. But there has to be a catch,
right? There definitely is. Yeah. If you significantly
increase the quantity of dollars floating around
out there without a corresponding increase in
actual economic output... you know, more goods,
more services, you risk devaluing the currency
itself. Exactly, you're directly stoking inflationary
risk. And given the debt levels we're talking
about now, the strategies we're focusing on today
are really these urgent attempts to find other
ways, non -traditional ways to get liquidity
without just printing more money and triggering
that exact inflationary feedback loop. Okay,
that makes perfect sense. And it brings us right
to the first and maybe the most historically
rooted part of this strategy, the gold revaluation
plan. This seems to be all about fixing an accounting
issue, something about a massive, almost kind
of crazy discrepancy in how the US Treasury values
the gold it holds. It really is astounding when
you look at it. The Treasury holds a lot of gold,
roughly 261 million ounces. OK. But on their
official books, they value it using a price that
was set way back in 1973. 1973, seriously. $42
.22 per ounce. So if you do the math, the total
official value of all that gold on their balance
sheet is only about $11 billion. $11 billion.
But wait, what's the actual market price of gold
today? It's much higher, isn't it? Oh, vastly
higher. Right now, it's hovering somewhere around
$3 ,700 per ounce. Wow. OK, so the real market
value of those 261 million ounces is? Closer
to $965 billion. $965 billion versus $11 billion.
That's... Nearly a trillion dollars in value
just sitting there, kind of hidden by old accounting.
Essentially, yes. Dormant asset value, trapped
by an outdated rule. And that difference, that
huge potential value, is what they're now looking
to tap into. So the plan isn't actually selling
the gold, right? They want to keep the physical
gold. Correct. It's not about selling it off.
It's just about changing the number on the ledger.
Is it really just an accounting trick or is there
more to it, like politically or financially?
It's kind of both, really. Yeah. The first step
is purely accounting. Adjust the book value.
to reflect the current market price. That creates
a huge paper gain, right? That nearly trillion
dollar surplus. OK, a paper game. How does that
become actual usable money for the government?
That's the clever or perhaps controversial part.
The Treasury would then issue special non -negotiable
certificates to the Federal Reserve. These certificates
represent this new, much higher asset value of
the gold. So pieces of paper backed by the newly
revalued gold. Exactly. And once the Fed accepts
these gold certificates onto its balance sheet,
it effectively credits the Treasury's account
with corresponding dollar amount, instant cash
for the Treasury. Ah, I see. So it's a way to
get a massive injection of funds without having
to go through the usual process of selling new
Treasury bonds to the public or the Fed. Precisely.
It leverages the market value of a historical
asset to generate funding that isn't technically
new debt in the traditional sense. That sounds
pretty radical. Has anything like this ever been
done before? It has, actually. There is a historical
precedent, which supporters of this plan often
point to. During the Great Depression, President
Franklin D. Roosevelt did something similar.
Really? FDR? Yes. He revalued the official price
of gold from around $20 an ounce up to $35 an
ounce. It helped increase the money supply and
provide resources during a severe crisis. So
the fact that they're dusting off a Great Depression
-era playbook kind of tells you something about
the level of fiscal stress they feel they're
under right now. It certainly reflects the seriousness
of the situation, yes. Okay, but here's where
it gets really interesting, especially thinking
about the risks. The Fed accepts these certificates,
essentially putting nearly a trillion dollars
based on gold's current market price onto its
balance sheet. What happens if gold then tanks?
What if it drops back to, say, $2 ,000 an ounce
after this whole revaluation? That is the absolute
crucial question and the central risk of this
part of the plan. Right. If the market price
of gold declines substantially after the revaluation,
the value of the asset underpinning those certificates
diminishes. This would potentially impair the
Federal Reserve's balance sheet. Impair? What
does that mean practically? Can the Fed go bankrupt?
Well, no, the Fed can't really go bankrupt in
the way a normal company can. because it can
create money. But suffering a massive, very public
loss on paper, potentially hundreds of billions
of dollars if gold falls sharply, would be a
huge blow. To its credibility. Exactly. It could
seriously damage public confidence, and maybe
more importantly, international confidence, in
the soundness of U .S. fiscal management and
the Fed's own stability. It's a big gamble on
the future price of gold remaining high. OK,
so that's the risk with leveraging gold, which
is at least seen as traditionally somewhat stable,
even if it fluctuates. Relatively stable, yes,
compared to what's next. Right. Because the next
part of the strategy takes us into a completely
different universe of risk, the Bitcoin reserve
strategy. We're shifting from old money to new
digital and notoriously volatile assets. It's
definitely a pioneering step. moving fully into
the 21st century, you could say. An executive
order has apparently established a formal strategic
Bitcoin reserve. And where did this Bitcoin come
from? Did the government buy it? No, it's primarily
sourced from cryptocurrency, seized in various
law enforcement actions, you know, from illicit
activities, cybercrime, things like that. Seized
assets. OK, do we know how much they have? The
estimates vary quite a bit in the source materials
we looked at. It seems to be somewhere between,
say, 30 ,000 and possibly up to 200 ,000. That's
a potentially huge range and a lot of value,
depending on the price. A significant amount,
yes. And crucially, the policy apparently changed
instead of immediately selling off these seized
bitcoins as they used to. Which is what they
typically did, right? Just auction them off.
Correct. Now, the plan is to hold them long term,
treating them as a strategic reserve asset, much
like the gold. OK, so they're holding Bitcoin
as a reserve. How does that help with the debt
problem? Is it the same idea as the gold plan?
It's analogous, yes, but using Bitcoin as the
collateral instead of gold. The government intends
to value this Bitcoin reserve based on current
market prices. Which are notoriously all over
the place. Extremely volatile, yes. But for illustration...
Let's use a figure mentioned in some documents,
maybe around $100 ,000 per coin, just as an example
valuation point. $100 ,000 per Bitcoin. So they
value their holdings. And then they plan to pledge
those digital assets, the Bitcoin, as collateral
to the Federal Reserve. Again, just like with
the gold certificates. To get liquidity, to get
cash from the Fed based on the value of the seized
Bitcoin. Exactly. It allows the government to
leverage these seized assets for fiscal support.
Again, without issuing new treasury debt in the
conventional way. But wow, the risk profile there
feels completely different from gold. Oh, absolutely.
It's qualitatively different. Gold certainly
has volatility. We discussed that risk. But Bitcoin's
history is one of extreme rapid price swings
far beyond what we typically see with gold. So
if the Bitcoin market trashes, which it has done
spectacularly in the past. The impact on the
Fed's financial position, if it's holding collateral
based on much higher valuations, could be dramatic.
And the hit to investor confidence, both domestic
and international, could arguably be even more
severe than with a gold price drop. Because it's
a less understood, less trusted asset, maybe?
Partly that, and partly just the sheer scale
and speed of potential losses. You're essentially
pledging a highly speculative digital asset as
collateral for the nation's finances. That means
the Federal Reserve's balance sheet suddenly
becomes vulnerable to the unpredictable swings
of the global crypto market. Which is a level
of direct exposure they have never, ever had
before. Never. It introduces a kind of speculative
instability right into the heart of the country's
foundational monetary institution. It's a profound
shift. OK, so we have these two quite different
asset strategies running in parallel, revaluing
old world gold, collateralizing new world Bitcoin.
How do they tie these together? Is there something
connecting them? Yes. There's a crucial third
piece that acts as the regulatory glue, if you
will. It's legislation called the Genius Act.
The Genius Act. OK. When did that happen? It
was reportedly enacted in July 2025. And it's
critical because it establishes the necessary
regulatory framework around a specific type of
digital currency. asset -backed stablecoins.
Stablecoins. We hear a lot about those. What's
the connection here? Well, the Genius Act specifically
sets up rules for stablecoins that are required
to be paid. one -to -one to either gold or Bitcoin
held in these U .S. strategic reserves we've
been discussing. Yeah, okay. So the gold and
Bitcoin aren't just collateral for the Fed. They're
also meant to back new forms of digital currency.
Precisely. The goal isn't just for the government
to hold these assets or pledge them to the Fed.
It's also to use them as the foundation, the
backing for new financial instruments that can
circulate within the broader U .S. economy. Why
is that part so important? How does creating
these stablecoins help solve the actual debt
problem. This is maybe the most complex but potentially
impactful part of the whole strategy. These stable
coins, because they are asset -backed and regulated
under the Genius Act, are essentially authorized
to circulate as alternative forms of highly liquid
currency. Like digital dollars, but backed by
gold or Bitcoin instead of just government promise.
Kind of, yes. But crucially, they are issued
by private companies that meet the strict regulatory
standards because these stable coins are private
sector liabilities, not government liabilities.
OK, I see. Their circulation effectively expands
the money supply and could potentially boost
economic activity and velocity without directly
adding to the federal government's debt obligations
on the Treasury's books. Wow. OK, so it's a way
to inject liquidity and potentially stimulate
the economy using private digital currencies
backed by government held assets without increasing
the national debt figure itself. That appears
to be the core idea. It's a mechanism to achieve
monetary expansion and provide liquidity through
regulated privately issued digital assets, bypassing
traditional debt creation. That is a huge shift
potentially, but it also sounds incredibly complex
to manage. Oh, immensely so. If these gold -backed
and Bitcoin -backed stablecoins become widely
adopted, you're not just managing the risk of
the Fed holding the assets, you're now managing
the systemic risk of potentially trillions of
dollars of this quasi -currency circulating issued
by private firms, all resting on the value of
those same potentially volatile strategic reserves.
The regulatory challenge is enormous. The Genius
Act would demand constant rigorous oversight.
Regulators have to make sure those valuation
pegs hold, that the stable coins remain stable.
Meaning ensuring the issuers actually have the
gold or Bitcoin backing every single token? Exactly.
Strict, verifiable collateralization standards
are key. If a major private issuer were to fail,
or of confidence in the backing waivers, the
systemic risk could be immediate and widespread.
And just making these things work with the existing
banking system must be a nightmare. The integration
challenges are historic. How do these digital
currencies interface safely, legally, and efficiently
with traditional bank accounts, payment systems,
everything? The long -term success of this entire
debt management strategy really hinges on the
robustness and the day -to -day effectiveness
of the regulatory enforcement under the Genius
Act. It has to work flawlessly. OK, let's just
step back for a second. All these really ambitious,
maybe even risky strategies, the gold revaluation,
Bitcoin collateral, the stablecoin framework,
they aren't happening in a vacuum, are they?
What's the bigger economic picture? No, definitely
not in a vacuum. It really puts the urgency into
sharp focus when you look at the macro environment.
The key metric people watch is the U .S. debt
-to -GDP ratio. Right. How much we owe compared
to the size of the entire economy. Exactly. And
that ratio shot past 119 percent in mid -2025.
Most economists look at levels significantly
over 100 percent with, let's say, elevated concern.
It suggests a potential structural imbalance.
So the situation was already looking pretty serious.
Very serious. It's also worth mentioning another
piece of recent legislation, the One Big Beautiful
Bill Act. which was signed around the same time,
July 2025. OK, what did that do? That act introduced
some significant tax and budgetary changes things
intended to try and stabilize government revenue
and affect the long term path of the debt. So
why are these more radical asset leveraging strategies
still necessary if that bill passed? Because
those legislative changes, things like tax adjustments,
take time to really filter through and impact
the fiscal numbers. These asset strategies. the
gold, the Bitcoin, they offer the potential for
immediate non -traditional funding that the government
seems to feel it needs right now while waiting
for those longer -term measures to hopefully
take effect. They're buying time, essentially.
OK, that makes sense. So if we try to pull all
these different threads together, the revalued
gold, the collateralized Bitcoin, the regulated
stablecoins, What's the single biggest overriding
risk that connects all of them? Ultimately, I
think the central risk comes back to the credibility
in the balance sheet of the Federal Reserve.
That's the linchpin. Oh, so. If either the pledged
gold or perhaps more likely the collateralized
Bitcoin were to depreciate substantially in market
value. and we talk about how volatile Bitcoin
is, then the value of the collateral backing
the Fed's assets diminishes. This isn't just
some abstract accounting problem. It directly
shakes the core confidence in U .S. fiscal stability,
especially among international investors who
hold trillions in U .S. debt. So a crisis of
confidence is the big fear. It's a major fear.
And layered on top of that is still the persistent
inflationary concern we discussed earlier. Even
though this isn't traditional debt, generating
a sudden massive flood of liquidity through these
complex asset -backed mechanisms could still
potentially expand the monetary base too rapidly.
Meaning, you could end up causing the very inflation
you were trying to avoid by not just printing
money directly. It's a definite risk. If that
liquidity surge happens faster than the real
economy can absorb it through growth, you could
intensify inflationary pressures. It requires
incredibly careful management. It really sounds
like this whole strategy is, well, incredibly
ambitious, definitely unorthodox, maybe even
a bit desperate way to manage the debt. It's
certainly a paradigm shift. It offers some undeniable
potential upsides like these new funding streams
that don't look like traditional debt. But it
also seems to introduce tremendous uncertainty,
doesn't it? Mostly due to the asset volatility
and the sheer complexity of the regulations needed.
So what does this all mean? Where does this leave
us? Well, I think it means we are witnessing
a fundamental change in how the U .S. government
is approaching its own solvency. They seem to
be reaching for every possible latent asset they
can find, both the really old historical ones
like gold and the very modern digital ones like
Bitcoin, basically, to buy time and try to stabilize
the fiscal ship. So success isn't guaranteed.
Far from it. For this whole strategy to actually
work, for it to ultimately safeguard trust in
the U .S. financial system, the prudent management
of that asset volatility we keep coming back
to, and frankly the diversification of the collateral
involved, those aren't just secondary details.
They're absolutely critical. They are paramount.
Everything depends on getting that risk management
right. Which brings us perfectly to our final
thought for you, the listener, to maybe mull
over. Policymakers here are trying to navigate
some pretty extreme fiscal pressure by using
two assets known for volatility. You have gold,
historically more stable, but super sensitive
right now because of this revaluation plan. And
then you have Bitcoin inherently prone to just
massive price swings. Two very different kinds
of volatility risk. Exactly. So the question
for you is, given Bitcoin's wild history versus
the historical significance and sensitivity tied
to gold, which assets future price swings do
you think pose the greater long term risk to
the Federal Reserve's credibility and stability
under this new debt strategy, gold or Bitcoin?
It's a tough question with huge implications.
It really is. We'll definitely be watching closely
to see how this all plays out.