Ed Bugos here, giving Jeff a break from the blog today.
Like Jeff (in yesterday's blog, The Bell Tolls For Thee, Dollar), I watched Ron Paul's five minute scuffle with Ben Bernanke with great anticipation. BTW, what is up with having only 5 minutes to question the man in charge of the official money supply for the US? The Kardashians get an hour of airtime every week. The man in charge of the lifeblood of the economy in the US? Five minutes every few months. That probably explains as well as anything why the US is in the dire straits it is in right now.
Getting back to Paul vs. Bernanke, though, like most lovers of liberty I have great affection for Ron Paul, even though he is a politician.
;)
As an interesting aside, back in 2007, out of curiosity, I tagged along on a political rally for Ron Paul in Vancouver, Canada. The rally was headed up, interestingly enough, by the Prince of Pot, Marc Emery. The group didn’t know me. I was the only stranger to respond to their ad so they thought I was a narc… since Marc was to be extradited to the US in the new year for selling marijuana seeds over the internet. He was one of the Feds’ most wanted criminals in America then. Here is a pic I snapped of him and his girlfriend at the end of the night.
I remember Marc Emery from my youth. I thought he was a socialist. So I asked him. He said he was. I asked what changed his mind. He said that he read Ludwig von Mises’s Human Action. There you have it. Proof that Ludwig von Mises transformed someone (the Prince of Pot in this case) from a card carrying socialist into a consistent laissez faire and freedom loving libertarian activist spreading the word about Ron Paul in my backyard!
I was elated. It was music to my ears. And you know how the crowd greeted the posters? With disdain. They lumped Paul in with George W. Bush and showed their scorn in many ways… not altogether politely. Canadians. So ignorant about America.
That’s because they got the winners’ account of American history up here.
But Ron Paul let us down in yesterday’s question and answer session – which I've attached again below.
He came very close to endorsing the socialist ideal of helicopter money – at least over the bailout of the big banks and corporations – by saying that if the $5 something trillion went to consumers instead of the banks and corporations it would have been a better result. He stopped just short of the endorsement. So okay, let him go that way, I thought, as I patiently listened. Maybe he’s got something up his sleeve that will corner the Bernank.
Then the Bernanke responded. He lectured Paul about the reason the Fed was supposedly created – to stave off crises… that their mission is to create financial system stability and protect consumers. Bang, I thought. Paul had him cornered. All he had to do now was to point out how ludicrous it is that the institution that causes the crises and instability is the same one that apparently saves us from these things.
Indeed, Dr. Paul interrupted the Bernanke nicely – just at the right moment for this. It was perfect. I was beaming with anticipation. But he continued on the consumer line instead. He asked Bernanke if he thought consumer spending was important.
Then, he asked Bernanke if gold was money. Naturally, the Bernanke said no, it isn’t. And in fact, it isn’t. What was Paul’s point here? He had the chance to nail the Fed as the “final cause” of society’s core problems, but dropped the ball and then asserted a myth that is one of my greatest pet peeves. If someone tells me that gold is money I will tell them they do not understand money. If gold were money we wouldn’t have these problems.
When you can take an ounce of gold and buy something with it in Wal-Mart, then you can tell me it is money. Granted, it is not so absolute now with the internet allowing for transactions in digital gold – like Goldmoney. In these cases gold is money. But, in most places, wherever the legal tender monopolies have the power to outlaw the use of it, gold is not money. It has monetary value. Yes.
Moreover, it is not a commodity because it is not consumed. It is hoarded like an asset. But it is not equity or debt. It is a reserve asset. It is insurance against the fiat money based centralized fractional reserve banking cartels with their legal tender monopolies and other protections. And we know how fast the cost of this particular insurance has risen.
So, technically, Bernanke is right; gold is not money. What did Ron Paul achieve by getting him to admit the obvious?!
We may hope that one day the world moves back to sound money. And there’s nothing in the definition of sound money that states it has to be gold or silver. It probably will be. But that’s up to the market –according to the “sound money principle,” which simply states that the government buds out of determining the object or value of money and interest.
When that day comes gold may be money. I believe we are headed that way. And I think gold will be money. It is now challenging the world’s biggest fractional reserve banking cartel – the one that supports the dollar – the world’s reserve currency and the world’s current most common medium of exchange. The dollar is money. We hope gold will displace it one day.
But to assert that gold is money is naïve. It shows confusion of what should be, what has been, and what will be with what actually is. It also undermines the case for gold because asserting that something is black when it is white is not going to draw many smart allies to your cause.
And even if we could get the Fed to admit that if it were up to the market gold would probably be money, so what. The Fed has millions of supporters that think the Fed’s money is better because it is more elastic… that it is better to intervene and that gold belongs to the old world – a barbarous relic -not our plunder free paradise. The Fed has a political mandate that it gets from the people… it is the people who want democratic socialism. They don’t want the discipline of god any more than most of the politicians. Remember William Jennings Bryan’s cross of gold speech. The rabble will not be crucified on that cross!
What is important for Paul to do is to show the damage the Fed does by implementing this political mandate so as to undress it in front of its popular supporters…the people. Its other supporters – government and crony corporations – aren’t going to care. They already know that the Fed redistributes national incomes. They get the benefit of them.
Most people do not see gold as money – correctly – and to them Paul lost credibility.
