Gold Is Not Money

[bchavez]

http://www.youtube.com/watch?v=rwaLnQDgrJ0

Laughed so hard at this REMIX.

[CaptainAmerica]

http://www.morethings.com/pictures/jon-stewart-hip-snideness.jpg PWned*high pitch voice

[heavenlyboy34]

lolz!

[Dr.3D]

Yeah, money isn't money anymore. Duh..... :D

And those who believe the money supply has to grow with the economy should now understand, we should have one hell of a good economy if that were the case.

[anaconda]

Gold really is not money currently. It is not in M1 and doesn't satisfy a couple of prerequisites for money: 1) unit of account and 2) medium of exchange. Bernanke was right with his statement. HOWEVER: gold could quickly become money again in the U.S. if it were minted into coins of a specific gold content or used to back paper certificates. Just because people flee from dollars into gold does not make it "money." It is a time tested "store of wealth." "Store of wealth" is another characteristic of money but not in itself a sufficient condition to define money.

[Acala]

Gold really is not money currently. It is not in M1 and doesn't satisfy a couple of prerequisites for money: 1) unit of account and 2) medium of exchange. Bernanke was right with his statement. HOWEVER: gold could quickly become money again in the U.S. if it were minted into coins of a specific gold content or used to back paper certificates. Just because people flee from dollars into gold does not make it "money." It is a time tested "store of wealth." "Store of wealth" is another characteristic of money but not in itself a sufficient condition to define money.

To understand what Dr. Paul did here, you need to hear the whole line of questioning which is not in this clip. The Ben Bernank says that gold is not money. In a sense he is right and you are right. But the dialog goes on. And it is revealed that the Ben Bernank views gold as an asset. And that banks hold it as an asset. It is when asked why banks consider it an asset and hold it that the charade comes apart. The only reason banks would consider it an asset is if it has value. They don't hold dirt as an asset. Banks recognize that gold has value. So what is the value banks see in it? For its use as jewelry? Lol. Ron punctures that. They don't hold gems or platinum. Why hold gold? The obvious answer is that banks recognize that gold's value as an asset is as a monetary metal. The Ben Bernank is forced to say tradition, but that is just shorthand for traditional use as money. In other words, Ron forced him to answer that yes gold is money and banks hold it for its value as money. It is not in general circulation at the moment because it was taken out of circulation by force.

So while you are correct and the Ben Bernank is correct in a small, textbook sense that gold is not in general circulation as currency at the moment, it IS money and is held and traded by all the banks in the world for just that reason. That was Dr. Paul's point. Truly brilliant.

[evilfunnystuff]

To understand what Dr. Paul did here, you need to hear the whole line of questioning which is not in this clip. The Ben Bernank says that gold is not money. In a sense he is right and you are right. But the dialog goes on. And it is revealed that the Ben Bernank views gold as an asset. And that banks hold it as an asset. It is when asked why banks consider it an asset and hold it that the charade comes apart. The only reason banks would consider it an asset is if it has value. They don't hold dirt as an asset. Banks recognize that gold has value. So what is the value banks see in it? For its use as jewelry? Lol. Ron punctures that. They don't hold gems or platinum. Why hold gold? The obvious answer is that banks recognize that gold's value as an asset is as a monetary metal. The Ben Bernank is forced to say tradition, but that is just shorthand for traditional use as money. In other words, Ron forced him to answer that yes gold is money and banks hold it for its value as money. It is not in general circulation at the moment because it was taken out of circulation by force.

So while you are correct and the Ben Bernank is correct in a small, textbook sense that gold is not in general circulation as currency at the moment, it IS money and is held and traded by all the banks in the world for just that reason. That was Dr. Paul's point. Truly brilliant.
"BOOOOM, ding-ding-ding, BOOM ta-ta-ta-taaaaaa"
PWND

[anaconda]

banks hold it for its value as money

I do wonder if bank's hold gold because of the ever present possibility of various economies returning to a gold standard?

[Acala]

Banks hold it for it's value. Not for it's value as money.

What is it valued for? That's the essence of Dr. Paul's line of questioning.

[anaconda]

What is it valued for? That's the essence of Dr. Paul's line of questioning.

I think I see your point. The specter of gold becoming a medium of exchange rather abruptly (especially in the case of currency crises) might cause people to hold it in anticipation of it being money in the future, and therefore having money-like characteristics in the present.

[Acala]

I think I see your point. The specter of gold becoming a medium of exchange rather abruptly (especially in the case of currency crises) might cause people to hold it in anticipation of it being money in the future, and therefore having money-like characteristics in the present.

Yes. And the several thousand year "tradition" of it ALWAYS being used as money in every known civilization. And the fact that it was confiscated by force from the people BECAUSE it was money and had to be impounded in order to not undermine the new fiat money. All this adds up to gold being held by banks and governments and many people BECAUSE of its value as money even if it is not currently in circulation except among banks and governments.

Gold is like a rightful king deposed and held in prison. He is still the king even if he isn't on the throne. And the fact that the usurper feels the need to keep him locked up just proves that he is the rightful king.

[Dr.3D]

Yes. And the several thousand year "tradition" of it ALWAYS being used as money in every known civilization. And the fact that it was confiscated by force from the people BECAUSE it was money and had to be impounded in order to not undermine the new fiat money. All this adds up to gold being held by banks and governments and many people BECAUSE of its value as money even if it is not currently in circulation except among banks and governments.

Gold is like a rightful king deposed and held in prison. He is still the king even if he isn't on the throne. And the fact that the usurper feels the need to keep him locked up just proves that he is the rightful king.

Very well put.

Just because for the past 100 years, governments have tried to make paper take the place of gold and silver as money, they try to get people to forget the thousands of years those metals were used as money. It seems those who would have us forget, haven't themselves forgotten, as evidenced by the gold in their vaults.