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Even Ben Bernanke Admits that Gold Is the Ultimate Safe Haven
As I noted yesterday, Alan Greenspan says that gold is the ultimate safe haven:
Gold still holds reign over the financial system as the ultimate source of payment.
Indeed, as I've previously reported, gold is in high demand during periods uncertainty and distrust of government. And see this.
As Ambrose Evans-Pritchard points out today:
Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.
Indeed.
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Well, he's not alone in having no idea.
Technically treasuries are near money, in that they must be sold for cash to create tender fo final payment. Some may accept treasuries in lieu of cash, but they still would have to convert to cash to pay the bills. (Think of that next time you hear the old "cash on the sidelines" argument for why the market will go up... -- "Uh... so I take my cash and buy your stock, what do you have?" up or down markets, cash on the sidelines remains constant before and after the transaction.)
But to the comparison to treasuries, Bernanke is perfectly correct, that under currently accepted practice in terms of "money", gold is no different than a treasury. Some of us might accept gold for payment, but we're selling our gold to pay our utility bills right now.
This raises the ongoing problem I have with Ron Paul's general appraoch to asking questions of Ron Paul. He meanders half his time away with a longwinded, semi-jumbled assertion about what's going down, and then asks questions that (to me) are poorly thought out, and in a disjointed sequence.
"Is Gold Money" resonates with gold bugs, but merely sets the seed for esoteric conversation on currency considered long settled.
A better question: "Why over the last decade has the best performing asset for wealth protection been precious metals like gold, which has far outpaced both stocks and bonds?", or something of that nature, and then build from there.
RP missed a trick with that exchange. He should have retorted : gold is sound money but UST paper is debt money Mr Bernanke. A big difference. One has zero liabilities and has thus survived thousands of years , the other has an average life expectancy of 39.5 years , give or take , due to its reliance on faith in government.
RP also missed to ask the Bernank about his thoughts regarding the Constitution, which says that gold IS money...
Yeah, except the Pharos didn't bury themselves with useless paper or debt. The Conquistadors didn't chase around the New World to dredge up wood pulp for more paper. The foundation of the U.S. Currency wasn't arbitrarily pegged on precious metals. It was all the free market trusted to accomplish the purposes of currency. Absent a PM origin to build up trust and reliability, doubtful folks would have accepted some rag tag piece of paper backed by a payment stream of other, worthless pieces of paper.
In the end, Money is a commodity, and the markets will prevail in determining what is an accepted store of value worthy of serving as a medium of exchange, never mind the newfangled theories that are simply modified versions of John Law inanity. This current system is collapsing despite every neo-monetarist / Keynesian theory of why it shouldn't, proving that, like calling a pig a cow doesn't make it a cow, relying on unbacked, fiat paper money is utlimately like relying on two Pigs to produce cows.
I will disagree with the former and more common argument by Austrian economists that money is a commodity. Money has unique properties which differ from commodities...
https://libertyrevival.wordpress.com/2010/06/22/honest-and-sound-critici...
True, but money is only real when it's a commodity. When it's not a commodity, it's simply an idea/concept/faith. Gold and silver are the closest to meeting both standards (properties/commodities).
wasn't the intent of Bretton Woods to 'decommodify' gold by fixing the price?
Money SHOULD be a commodity, but that certainly doesn't describe what the USD is.
You can't call anything that can be created on a hard drive by adding zeros a commodity.
I hope the Bitcoin boys are reading this...
The current system is going to a halt because it is the end of a cycle of expansion. Gold as a currency has no better record than fiat money when it comes to deal with the reality of an expansion cycle ending.
Propagandits should really find better money. As to the story of free markets etc... please, free marketers themselves have explained why and how excluded why substitence markets are not free markets and your list of historical periods contains period of substitence markets.
Only in US driven world, a thing can be and can not be.
That comment was so entirely void of meaning and logic, you no longer even care to spend half a minute to construct a biting or ironic post. Such a post can only come from someone getting paid "per post" posting hundreds of comments across sites and threads. If it puts food on the table for you-- whatever. But please, if your paymasters are reading this- Fire this troll for lack of interest and initiative. At least have your trolls make comments that make sense.
Just junk him as soon as you see his name. After 50 people read his drivel, poof, he's gone! Oh for the days when we had reasonable trolls.
Maybe papyrus buried with them.
gold is a commodity, yes. but represents not just a tangible commodity but also a non tangible commodity, an individuals labor to perform a service or produce a good.
i have read a tailored suit of clothes cost an ounce of gold in the 1880's. a suit represents both a portion of material and skilled labor to produce it. in my mind it is that trait, representation of the tangible and non tangible, that makes gold real money.
What differentiates gold and silver are their scarcity vs. other commodities, thus providing a dramatically more stable unit of account than other commodities. Hence, its near universal acceptance as money throughout history and it's repeated restoration to money after countless (and always failed) dalliances in paper currencies.
Nonetheless, the calculation of value to value is a constantly ongoing process. That a suit cost an ounce of gold at one time is certainly reasonable. I've heard that a fine Roman toga could be attained similarly. But that is because the market cleared that the collective effort and time involved in bringing to market an ounce of gold was similar to that which produced a suit.
But again, what type of suit? Certainly all suits were not of the same quality, and that some went for half and ounce or gold while others might cost two. Just compare a suit from J.C. Penny to one from Brooks Bros.
Spain learned a hard money lesson about money and value when its conquistadors flooded its economy with tons of stolen gold from the new world. Flooding the market with gold only served to undermine the economy, and especially those who came to understand it last. But at least the recipient was left with gold as opposed to a piece of paper.
But to the point, what's tangible is the relationship of value, and that is never a constant. That someone might define a dollar as 1/20th of an ounce of gold (as it was before 1933 and FDR) in a truly honest money system (which the U.S. has not had much of) does not change the fact that from day to day, week to week, that honest dollar might buy more ore less goods.
Generally speaking, though, absent deliberate manipulation or legalized fraud, the gold dollar held its purchasing sufficiently, and the efficiencies produced by an economy resulting in lower costs for the same or better goods were passed onto the consumer via lower prices. That changed in 1913 with the Fed coming to be, leading to a (our current) system of planned inflation, where the state / bankers targeted inflation rate not only negates (confiscates) those efficiencies / lower prices, but adds a steady price rise via CPI. (those confiscated efficiencies go to the benefit of those who get early-use of the newly minted cash.) This is why the dollar today purchases less than 1/20th of its pre-Fed purchasing power. Back then a millionaire was someone with serious bucks. Today? Not so special.
Brooks Bros is cheap shit
Unless it is the Mel and Albert Brooks brothers shit.
Some of that stuff is good quality.
you can get a nice suit from Day on the bahnhofstrasse.. for a not really such a tremendous amount of money either, especially compared to the crap people sell in a lot of places. Dont even get me started on the US, where the consumers (we don't call them people or citizens or humans anymore.. they're just Consumers now.) have been suckered into spending way too much on pure shit, in almost every category..
...but personally, most of the time i wear free t-shirts ;)
There's no such thing as a free t-shirt
Clothes are so cheap in Amerika they are for all intents and purposes free. People discard perfectly good clothing if it is no longer a perfect fit or fashionable in their mind. Of "food clothing and shelter" in the US the two are so cheap life is almost too easy, if TPTB could find it in their black hearts to let us have shelter for some realistic price, we would as a nation be literaly living on easy street. Alas, shelter is insanely overpriced and taxed in this "country."
Made me laugh. The near acceptance is because most people around the world worshipped the Sun (gold) and the Moon (Silver)
Gold was scarcer than iron in South america? In North America? drivel after drivel.
Undermined the economy? The economy has grown more complex in Spain at that period. What Spain experienced is the concentration of wealth on a certain spot and the consequent effects.
I junked you. Not because you are ignorant, but because you were ignorant and arrogant.
Again you beat me to the real story. Damn... I'll have to try harder.
I was just going to write that people worshipped the Sun and Moon and decided to associate Gold and Silver with each. I mean, scarce or not, if Gold was pitch black and Silver was bright red, I am not sure they would be valuable today equally to G / S. I too believe G / S were valued because of their metaphysical associations and aided by physical limitations.
It is no small irony that Gold and Silver are produced in stars, like the Sun. Maybe the ancient aliens knew Gold and Silver were good with electricity and heat... ;) .
http://education.jlab.org/itselemental/ele079.html interesting bit on Gold.
http://education.jlab.org/itselemental/ele047.html about Silver.
"""""""Made me laugh. The near acceptance is because most people around the world worshipped the Sun (gold) and the Moon (Silver)"""""""""""""
Nope. Dude. Your access to history is limited to your human brain.
Bread is the currency of the Sun,
and
Cheese is the currency of the Moon.
Silver and Gold are the "ashes" of exploded stars.
Duh.
Psst... http://www.skyscript.co.uk/metal3.html / http://www.skyscript.co.uk/metal8.html / http://www.revelation-today.com/A1Bible%20Symbols.htm / http://www.wisdomportal.com/SpiritualSun/SunSymbolism.html
Doh < in homer simpson voice >
What's the reason gold and silver are still accepted around the world? Do people still worship the sun and moon gods?
I guess
That's what Bernankenstein says.
Tradition
Why gold and silver should not?