Ron Paul Is Right About Gold and Money

by James E. Miller

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Remember this classic exchange between Congressman Ron Paul and Fed Chairman Ben Bernanke?

Anyone with a sense of history for central banking and monetary operations was shocked when Bernanke, with a straight face, declared that gold wasn't money.  The silence that preceded his answer was deafening. It’s almost as if Bernanke knew his goose was cooked as the whole world watched.  As Paul noted, such a statement disregards thousands of years of historical evidence demonstrating gold's use as money among man.

As if Bernanke's painful admission that gold isn't money wasn't bad enough; he went on to timidly suggest that central banks hold gold because of "tradition."  Tradition of what you may ask? Confiscating the means by which the public protects itself from endless fiat printing? Or perhaps it's just a shrewd effort to exert the state's dominance in society through the forced use of paper bills containing pictures of past "leaders."  Whatever the case, Bernanke, grasping in the dark to defend the system which is losing credibility by the day, deflected with academic shrugging and asserting that people hold gold to protect themselves against "really bad outcomes."  From a Fed chairman's point of view, these "really bad outcomes" are never the threat of high inflation or the collapse of an unsustainable fractional reserve banking system.  Such admittance would be blasphemous.

While this exchange between Paul and Bernanke set the economic blogosphere on fire last July, it turns out not all central bankers agree with the Fed chairman's assessment of gold.  In lieu of the fiscal train wreck that is Europe, world leaders at the recent G20 meeting in Cannes, France were rumored to be considering a tapping of the gold reserves held by German's central bank, the Bundesbank, to fund the European Financial Stability Facility.  Like maggots to a dead carcass, never doubt the state's ability to find a new source of wealth to dig into.  A Bundesbank spokeswoman responded, "we know this plan and we reject;" essentially putting the brakes on such a blatant act of theft for the time being. 

Two things were revealed from such a plan.  First, world leaders will go to great lengths to ensure the banks holding euro debt will be bailed out and they aren't afraid to sell Germany down the river to do it.  Second, and even more revealing, was that such a proposal shows that gold is money despite the crumbling fiat system by which politicians make their deceitful living off of.  According to Goldcore, central banks around the world have been slowly accumulating gold in 2011:

Even with the Bundesbank rejecting the proposal, euro finance ministers are on track to further discuss the gold grab this week.  So much for sovereignty in the face of New World Order.

While Ben Bernanke attempts to defend the fiat system he represents over an honest currency, his central bankers-in-arms sing a different tune.  Who wouldn’t take advantage of the asset you make all the more attractive through endless liquidity used to prop up a corrupt banking system and finance ever increasing government spending? With the world's governments actively engaging in a currency race to the bottom, gold will only become more attractive as a currency while Bernanke becomes the Youtube sensation he deserves to be.

November 9, 2011

James E. Miller [send him mail] holds a BS in public administration with a minor in business from Shippensburg University, PA. He is a former staff columnist to the Shippensburg Slate and current contributor to his hometown newspaper, the Middletown Press and Journal. See his blog.

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