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Responding to Ben Bernanke’s statement to Ron Paul that god isn’t money, the NIA (National Inflation Association) published their recent newsletter, explaining why they believe Bernanke is wrong and why American’s should know that gold IS money.
During the session with Congressman Ron Paul, Bernanke said that the Federal Reserve is prepared to act with an additional round of quantitative easing if there is any weakening of the US economy and threat of deflation. He also stated that another alternative to stimulate the US economy was by cutting the interest rate that the Fed pays to banks on their $1.5 trillion in excess reserves that they currently keep parked at the Fed. In their newsletter, NIA responded:
…this $1.5 trillion alone would multiply into $15 trillion once it circulates through the U.S. economy and if Bernanke on top of that unleashes any additional quantitative easing, it will just about guarantee hyperinflation. Bernanke has made it very clear that he is prepared to print money until the U.S. dollar becomes worthless and the incomes and savings of all U.S. citizens are destroyed.
Answering Ron Paul’s question whether gold is money, Bernanke admitted that he does not watch the price of gold and that he thinks that gold is not money but only an asset. When asked why the central bank holds gold and not diamonds, Bernanke said that it is because gold was a “tradition”. The reason why his “gold isn’t money” statement is being laughed about all across the globe is because throughout civilizations of thousands of years gold has been accepted as money on every land on earth. Gold is the one type of money that does not experience inflation or reduces at all in value. 1500 to 2000 years ago 1 gold dinar coin, which is about 4.25 grams of gold or 0.15 oz, would buy 2 goats and today the price has not changed. Gold is still accepted as money in a lot of countries today.
So why would Bernanke say that gold is not money? Does he really not know any of the facts about gold? The NIA believes that Bernanke deliberately does not want the US citizens to wake up to the truth.
Bernanke doesn’t want U.S. citizens to wake up and realize that they can opt-out of the criminal Federal Reserve system if they get rid of their U.S. dollars and store all of their wealth in gold and silver.
The fact that the Americans should know is that even the US Constitution defined gold as legal tender. But the current fiat currency system that is not backed up by gold which the world is operating under today, is the very system where people like Bernanke can steal the wealth of the poor and the middle-class who only hold on to paper money and are still asleep to the truth about the value of gold. By continuing with his quantitative easing the US dollar continues to lose its value and therefore stealing the purchasing power of the people who only holds the greenback. In the beginning, the US dollar was backed by gold but today the fiat currency is backed by nothing. The NIA writes,
Any remaining purchasing power the U.S. dollar still has is just an illusion and will soon evaporate due to Bernanke’s actions.
Ron Paul asked Bernanke why central banks hold gold and not diamonds. Bernanke said that it is because of tradition. The truth is that in order for something to function as money, it should be liquid, easily tradable, transportable and durable. The item should be divisible into smaller unites without destroying its value. The item also has to be fungible which means that one unite of equal weight must be equivalent to another. This is the reason why diamonds can’t be used as money, it is not because holding gold instead of diamond is “tradition”.
The most important requirement for an item to be accepted as money is that it should easily be recognizable and difficult to counterfeit. That is why, NIA writes, the US dollar simply can’t be real money compared to gold because…
Bernanke has been counterfeiting trillions of dollars out of thin air. Money shouldn’t require a mark or image to be valuable, but it should just be valuable based on weight and measure. Gold is valuable based on its weight and measure, and fits all of these other qualities and characteristics as well. Never do people explore shipwrecks hoping to discover U.S. dollars, because dollars that Bernanke can print at will even if they could survive the corrosion of the ocean, simply won’t have any purchasing power left by the time explorers can locate them. People explore shipwrecks for gold, because it will last underwater for thousands of years and always retain its value.
Another argument that the NIA writes regarding gold as money, is that the supply of an item to be accepted as money has to be scarce. That is why gold and silver is accepted as money. However, Bernanke has flooded the world with excess liquidity of the US dollar and led the world to massive inflation in the prices of food and energy. So if anybody would answer if gold is money, it should be, “Yes, gold is real money. But the US dollar is not.”
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