Professor Bernanke rails against gold standard

[Revolution9]

Something I am learning is that supposedly Adam Smith in his economic treatise "The Wealth of Nations" was the one who formalized the idea that gold was not a valid means of backing a currency but rather a Nations currency should be based on the labor and productivity of its citizenry.

For example, Adam Smith argues

But of course Adam Smith lived before the age of machinery, so the value of labor is not universal at all. One man with a backhoe, for instance, doing nothing but sitting and moving his hands and feet, can do the labor of 100 men with shovels using their own muscle power.

Unless you define labor as ergs and then they run about the same.

rev9

[DEGuy]

Things must be looking pretty bad for the Keynesians if they need to send out Bernanke to indocrinate the next generation of leaders with their failed monetary policies.

[Lishy]

What did he actually say? I'd love to see how it addresses why sound money is worse than bureaucrats who can create money out of thin air.

[QE Is Theft]

I cite none other than (ironically) former Federal Reserve Chairman Alan Greenspan to completely, and utterly obliterate Bernanke's argument against reinstating the Gold Standard:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

http://www.321gold.com/fed/greenspan/1966.html

[Black Flag]

I cite none other than (ironically) former Federal Reserve Chairman Alan Greenspan to completely, and utterly destroy Bernanke's argument against reinstating the Gold Standard:



http://www.321gold.com/fed/greenspan/1966.html

It does not matter whether it is a gold standard, FRBN standard, moon rock standard.

As long as there exists a fractional reserve system and monetary policy dictates from a central bank, nothing will change.

It is dangerous to assume that merely if we had a gold standard, the economic issues we suffer would not occur.

But history has shown us gold standards - and they suffered economic turmoil for the very reason we do today - central bank and government manipulation.

If the core cause of economic turmoil remains the same, you are merely played as fools even with gold.

[Bern]

...
As long as there exists a fractional reserve system and monetary policy dictates from a central bank, nothing will change.
...

HR 1098 would provide a true market check on central bank malfeasance / monetary policy. Let's level the playing field and see what happens.

[WilliamC]

It does not matter whether it is a gold standard, FRBN standard, moon rock standard.

As long as there exists a fractional reserve system and monetary policy dictates from a central bank, nothing will change.

It is dangerous to assume that merely if we had a gold standard, the economic issues we suffer would not occur.

But history has shown us gold standards - and they suffered economic turmoil for the very reason we do today - central bank and government manipulation.

If the core cause of economic turmoil remains the same, you are merely played as fools even with gold.

I agree that the goal is not a mandated gold backed currency, but rather simple removal of legal tender laws and taxes which make it impossible for any commodity to legally compete with FRNs as currency and money.

It's not the gold that is magic, it's the fact that in all of recorded history people have chosen gold to store and measure wealth that is magic.

Let the free market chose what to use for money and I'm happy. Heck, we might even see so much gold come out of hiding that it would be deflationary for it's price as compared to other commodities, and that would be fine with me too.

<edit>

Which is why the magic eight ball has the answers..

[Black Flag]

It's not the gold that is magic, it's the fact that in all of recorded history people have chosen gold to store and measure wealth that is magic.

Well put.