So is gold “money” or isn’t it? There is so much disagreement about this I don’t know what to think anymore!
After Fed Chairman Ben Bernanke replied in the negative to Ron Paul’s question “is gold money?” – a storm broke out in financial circles around the world, with experts taking both sides. But before anyone can answer this seemingly straightforward question, we need to define what “money” is. It’s clearly a medium of exchange. It’s a store of value. And it’s a unit of account.
- Has gold been used as a medium of exchange? It was for the past 2-3 thousand years – and continues to be. Is it money? Sure appears to be, so far. It’s not the DOMINANT money in today’s “fiat” world – but it ticked this one box for sure.
- Does it store value? Better than anything else we know. While the dollar (and EVERY other fiat currency you can name) has lost nearly ALL its value in a mere 100 years, gold has by and large retained the same value today as it had 2000 years ago. In this case, then, it’s BETTER than “money.” But, okay, it just ticked the second box. It’s MONEY.
- Is it a unit of account? Even though it isn’t used as such very much today, it CAN be – and HAS been (and occasionally still is!). Third box is ticked. It’s money.
This is, of course, a very over-simplified argument. If it was that simple Bernanke would never have made the misleading statement he did. But when you analyze all the positions carefully, consider the history, definitions and finally FACTS – as well as the simple truth that YOU too would gladly change your money for gold in a blink of an eye, there can only really be one answer to this question: YES, OF COURSE IT IS! And don’t let all the elaborate definitions fool you.
- The Creature from Jekyll Island
- Human Action