Ron Paul vs Bernanke : Is Gold Money? - July 13, 2011 Congressman Ron Paul questions Federal Reserve Chairman Ben Bernanke in a U.S. House Financial Services Committee Meeting shortly after reports surfaced that the Federal Reserve was preparing for a third round of quantitative easing.
"I care not what puppet is placed on the throne of England to rule the Empire, ...The man that controls Britain's money supply controls the British Empire. And I control the money supply."
-Baron Nathan Mayer Rothschild
“When you wake up in the morning, do you care about the price of gold?” he asked Mr. Bernanke.
“Well,” Bernanke replied. “I pay attention to the price of gold. But I think it reflects a lot of things. It reflects global uncertainties. I think the reason people hold gold is as protection against of what we call tail risks, really, really bad outcomes.
And to the extent that the last few years have made people more worried about the potential of a major crisis then they have gold as a protection.”
Paul: “Do you think gold is money?”
Bernanke: “No. It’s a precious metal.”
Paul: “Even if it’s been money for 6,000 years? Somebody reversed that and eliminated that economic law?”
Bernanke: “Well, you know, it’s an asset. Would you say treasury bills are money? I don’t think they’re money either, but they’re a financial asset.”
Paul: “Why do central banks hold it (gold) if it’s not money?”
Bernanke: “Well, it’s a form of reserves.”
Paul: “Why don’t they hold diamonds?”
Bernanke: “Well, it’s tradition. Long-term tradition.”
Paul: “Some people still think it’s money.”
The Federal Reserve Chairman’s admission that gold is “protection” against “tail risks” and “really, really bad outcomes” is important and marks another step towards gold’s movement from being a fringe asset to being a core part of a properly diversified portfolio.
Gold is increasingly being seen as an important safe haven asset and specifically as currency (despite Bernanke’s feeble denial of this.)
Many speculate that this interview may be seen as another landmark in gold’s move from “barbaric relic” to a mainstream investment and savings vehicle.
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