NEW YORK (TheStreet) -- On Jan. 17, a month late and to little fanfare and even less media coverage, the U.S. Treasury Department reported the deficit was $6.9 trillion, or 46% of total U.S. economic activity for 2012, using Generally Accepted Accounting Principles. By comparison, the 2011 GAAP deficit was $4.6 trillion.

GAAP accounting is required of all publicly traded companies in the U.S. The GAAP deficit includes the present value of all of the newly promised unfunded liabilities (mainly Medicare, Medicaid, and Social Security).

The Government Accountability Office currently estimates the total sum of all past and present unfunded liabilities at $88 trillion, or nearly six times the size of the GDP. The new unfunded liabilities themselves were estimated by the GAO to be $5.3 trillion, or more than 35% of 2012's total economic activity, and the deficit, excluding these newly promised unfunded liabilities, was $1.3 trillion, more than $226 billion higher than the $1.1 trillion -- the "official" deficit estimate that is bandied about by the politicians and the media.

State and local pensions are often criticized for being underfunded. However, if such a pension is 35% underfunded, at least 65% of the assets needed to make the future payments are present. By contrast the federal government's promises are 0% funded and the payments must come out of the taxes collected in the year the payments are due.

Worse, because of materiality issues, the GAO will not offer an opinion on the Treasury's GAAP financial statements. Imagine what would happen in the marketplace to the stock price of a publicly traded company that reports a loss, but upon audit it is revealed the loss is more than six times higher and the auditor won't opine because of material issues with the data.

Think of the fury of the politicians and the reaction of the Securities and Exchange Commission. Yet, not a word has been uttered, nor is the real magnitude of the U.S.'s fiscal issues even acknowledged.

Gold, the Safe Haven

A Jan. 11 report authored by Meghnad Desai, chairman of the Official Monetary and Financial Institutions Forum, a global monetary think-tank and adviser to central banks, sovereign funds and financial policy makers, warns of "twin shocks" to the dollar and the euro while indicating gold is a safe haven. The report contends that "gold -- the official asset that plays no formal part in the monetary system, yet has never really gone away -- is poised, once again, to play a critical role."

While the western currencies weaken due to heretofore unthinkable worldwide money-creation policies, China and countries in Asia that have "over saved" now sit on "massive monetary reserves." The level of such reserves has "become the most potent factor behind reserve diversification into other assets including gold," says Desai.

That is, the holders of these reserves are beginning to shun the dollar and the euro and are looking for safe havens. Sooner or later, China's renminbi will play a major international role. But as of today the Chinese financial system is very immature, riddled with huge asset problems, and is not capable of taking on more than a minor role in international trade.

As a result, as the world loses confidence in the dollar, euro, yen and sterling, safe havens will be sought as a hedge against currency devaluations. No doubt gold will be a major player.

We Want Our Gold Now

In mid-2011, Hugo Chavez's Venezuela demanded that 160 tons of its gold bullion kept by the Bank of England, JPMorgan Chase ( JPM), Barclays ( BCS) and Standard Chartered ( SCBFF) be shipped back to Caracas. It took several months to deliver, with the last shipment arriving on Jan. 31, 2012.

Because delivery took so long there was some speculation the gold was not really in the vaults, and that it had been loaned out or was being used as collateral during the euro crisis. It had to be purchased on the open market and that is why it took so long to ship.

Not much was made of this at the time considering the source of the demand and the relatively small amount involved.

Soon after, however, the central bank of Germany's governing body demanded an audit of the gold reserves it had stored at the Federal Reserve Bank of New York. The N.Y. Fed had, historically, been uncooperative with any inspection requests regarding the gold bullion it supposedly held deep in its vaults in Manhattan.

Once again, in 2012, the N.Y. Fed denied the German request for an audit but after much political pressure, succumbed somewhat and allowed a German official to inspect one vault - but still no audit of the 1,536 tons of German gold that is supposed to be there. While all the Germans originally wanted was a basic audit, the lack of cooperation on the part of the N.Y. Fed has now caused the Bundesbank to demand that half of its reserves (768 tons) be transported back to Frankfurt.

Who could blame them? In an era in which we have seen the collateral of unsuspecting clients simply disappear (M.F.Global, Bernie Madoff), and in an era where gold is pledged to cover loans to large institutions and such loans are handed out willy-nilly, there should be cause for concern on the part of large central banks that hold gold in foreign vaults.

Too Much Debt, Paper Money

The signs are clear. The world's major reserve currency country, the U.S., is running a GAAP deficit six times larger than the "official" numbers, and that deficit represents nearly half of its economic output. That reserve currency country is making payment promises it can't ever hope to fulfill without either default or significant inflation.

The monetary authority, the Federal Reserve, enables such policies by running the money-printing presses and using the newly minted stuff to purchase much of the deficit. Because there are no real assets behind the unfunded liabilities, the cash deficit is destined to become larger and larger as the promises made turn into demands for payments.

Unfortunately, the U.S. is not the only bad actor on this stage. The central banks of the other industrial countries (Japan, Europe, the U.K.) have followed the Fed's lead.

International observers are warning of the implications of such policies, yet their warnings are ignored and the policies persist. Because there is no other country with a sound financial system that is capable of stepping up to reserve currency status, countries with significant monetary reserves are starting to look to hedge the value of those reserves against what is sure to be devaluing major currencies.

Japan has now, under the Abe government, openly espoused such devaluation. The policies of the other major central banks appear to be leading to currency wars and a "race to the bottom" as far as currency values are concerned.

Without a strong world reserve currency, the world's oldest traditional hedge, gold, is sure to play a major role. Central banks around the world with currency reserves are scrambling to hedge their hard-earned reserve stash. The actions of Venezuela and now the Bundesbank are just the beginning. The warning signs are as clear as the words you are reading.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.