Why do central banks hold gold? Bernanke: Tradition

[peilthetraveler]

Paul: Is gold money?
Bernanke: No

Paul: Why do central banks hold gold and not diamonds?
Bernanke: Tradition

I dont even know what to say to this. My jaw is still on the floor that he thinks like this. I used to just think Bernanke was just a big liar, but now I think he might just be an idiot.

<iframe width="480" height="390" src="http://www.youtube.com/embed/2Dj9v9s9buk" frameborder="0" allowfullscreen></iframe>

 

[emg]

Quote from peilthetraveler:

Paul: Is gold money?
Bernanke: No

Paul: Why do central banks hold gold and not diamonds?
Bernanke: Tradition

I dont even know what to say to this. My jaw is still on the floor that he thinks like this. I used to just think Bernanke was just a big liar, but now I think he might just be an idiot.

<iframe width="480" height="390" src="http://www.youtube.com/embed/2Dj9v9s9buk" frameborder="0" allowfullscreen></iframe>

they hold gold based on high demand and short supply.

 

[Pekelo]

Quote from peilthetraveler:


I don't even know what to say to this.

I see you get easily confused. When such thing occurs, consult your dictionary:

"Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."

Is gold generally accepted for goods and services? No. Thus by definition it is not money. Neither is diamond nor my non-existing baseball card collection. Just because something is valuable it doesn't mean it is money....

Gold is valuable and you can make money out of it, but gold itself by definition is not money.

I am glad I was able to help.

P.S.: Ron Paul is confused too. If you make coins (money) out of bronze, that doesn't mean bronze is money. So in history, money made out of gold didn't make gold money.

 

[Covertibility]

Quote from Pekelo:

I see you get easily confused. When such thing occurs, consult your dictionary:

"Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."

Is gold generally accepted for goods and services? No. Thus by definition it is not money. Neither is diamond nor my non-existing baseball card collection. Just because something is valuable it doesn't mean it is money....

Gold is valuable and you can make money out of it, but gold itself by definition is not money.

I am glad I was able to help.

P.S.: Ron Paul is confused too. If you make coins (money) out of bronze, that doesn't mean bronze is money. So in history, money made out of gold didn't make gold money.

This is a thread for Serious people, not serious people.

 

[Ultracruncher]

Quote from peilthetraveler:

Paul: Is gold money?
Bernanke: No

Paul: Why do central banks hold gold and not diamonds?

Bernanke: Because Mr Paul diamonds are not fungible. If you do not know what that means I think it probably best you pass the mic over to someone better qualified to be asking me questions.

Now that would have been a good answer.

 

[Larson]

Quote from peilthetraveler:

Paul: Is gold money?
Bernanke: No

Paul: Why do central banks hold gold and not diamonds?
Bernanke: Tradition

I dont even know what to say to this. My jaw is still on the floor that he thinks like this. I used to just think Bernanke was just a big liar, but now I think he might just be an idiot.

<iframe width="480" height="390" src="http://www.youtube.com/embed/2Dj9v9s9buk" frameborder="0" allowfullscreen></iframe>

What do you expect him to say? US counterfeiter-in-chief, cannot run the presses with any sort of gold backing. Hence, the "current" Fed is opposed to gold. Pure fiat clown money cannot be backed by any sort of gold arrangement as it limits the ability to wage war indiscriminately and other various evils the /fed seeks to perpetuate. Only problem is the experiment is now blowing up in their face, as gold heads toward 1600 and the great beyond. Ben's tenure has seen the metal rise from 400 to 1600. Each day that passes makes his resignation or ouster that much closer.

 

[Tsing Tao]

Quote from Pekelo:

I see you get easily confused. When such thing occurs, consult your dictionary:

"Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."

Is gold generally accepted for goods and services? No. Thus by definition it is not money. Neither is diamond nor my non-existing baseball card collection. Just because something is valuable it doesn't mean it is money....

Gold is valuable and you can make money out of it, but gold itself by definition is not money.

I am glad I was able to help.

P.S.: Ron Paul is confused too. If you make coins (money) out of bronze, that doesn't mean bronze is money. So in history, money
made out of gold didn't make gold money.

Great explanation, Dr. Webster! Thanks!

Now, why do central banks hold gold, then?

 

[MakeNoMistake]

Completely agree. I think Ron Paul did this for publicity. The gullible masses will see the clip (which, by the way, is already all over the internet) and think he is a righteous man fighting for the good of the common man. (Flag waving in the background and heroic music playing.)

Quote from Pekelo:

I see you get easily confused. When such thing occurs, consult your dictionary:

"Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."

Is gold generally accepted for goods and services? No. Thus by definition it is not money. Neither is diamond nor my non-existing baseball card collection. Just because something is valuable it doesn't mean it is money....

Gold is valuable and you can make money out of it, but gold itself by definition is not money.

I am glad I was able to help.

P.S.: Ron Paul is confused too. If you make coins (money) out of bronze, that doesn't mean bronze is money. So in history, money made out of gold didn't make gold money.

 

[StarDust9182]

Both of them know the real answer, that is why the pregnant pauses in the recording.

A theory I have is that when the central banks began the big negative press against gold, they created interest rates. They didn't want interest rates high, but the higher the rates the more they could say - don't keep it because you don't earn interest. By controlling interest rates they controlled their world. Interest in simply dishonest debt of course.

But now the banking debt game is almost up. They have to lower interest rates, Gold price soars as people hedge but their savior inflation is nowhere to be seen except in the commodities which are similiar to gold - stores of value. Deflation pressures are clear in graphs. QEs will come faster and faster. Trouble in paradise perhaps?

Where he speaks of tail risk - I think he means his own a--!

 

[murray t turtle]

Quote from Pekelo:

I see you get easily confused. When such thing occurs, consult your dictionary:

"Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context."

Is gold generally accepted for goods and services? No. Thus by definition it is not money. Neither is diamond nor my non-existing baseball card collection. Just because something is valuable it doesn't mean it is money....

Gold is valuable and you can make money out of it, but gold itself by definition is not money.

I am glad I was able to help.

P.S.: Ron Paul is confused too. If you make coins (money) out of bronze, that doesn't mean bronze is money. So in history, money made out of gold didn't make gold money.

==============
Interesting read, Pek;
But for much o f history in America, Argemtina, Israel,Persia-Iran , Iraq-Babylon[ Greece ]Copper coins, gold, silver, silver shekels[,buck skins/[LOL deer skins] have been money.

Long term trends[metal money, copper coins...] tend to WIN;
long term trends tend to persist[{TREND/Friend]Paper money is poplar, convenient, i like it also.

With all do respect to Mr Ben B & I do respect him;
I prefer Mr Alan Greenspans remark''got a dime allowance as a kid[but it was a silver dime''. silver... is defined as money in Hebrew dictionary......................................................

Actually Mr Ben B Fed head , does a better than average job, thats why US dollars s are preferred over peso...most any paper money.

Hope this helped, it helped me. Most all i look @ is priced in Federal reserve notes/USD/paper money
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$