Ben Bernanke Tries To Convince America That The Federal Reserve Is Good And The Gold

[mick silver]

http://theeconomiccollapseblog.com/archives/ben-bernanke-lectures-america-about-why-the-federal-reserve-is-good-and-the-gold-standard-is-bad

[mick silver]

Bernanke Fights Back Against a Gold Standard ... http://www.thedailybell.com/3718/Bernanke-Fights-Back-Against-a-Gold-Standard

[mamboni]

Ben Bernanke is a rabid liar. He knows full well that gold is money. He knows full well that gold is held by central banks as the ultimate bedrock wealth asset. He knows full well that Jews have coveted gold above all other material wealth for their entire history, from the very beginning. He is a liar and he thinks that we the people are stupid ignorant clueness uneducated cattle who will believe this absurd falsehood that he spews. The man really disgusts me to look at and listen to: he has completely sold his soul to the dark side.

Mark my words: some day, after the financial collapse, with a nation in ruins and no gold to be found; people will find America's gold that was looted using trickery, lies, and outright fraud and theft. They will find the gold in Israel. Israel and the Zionists have stabbed America in the back because they are parasites that crave only two things above all others: gold and blood.

[ximmy]

The elites have been fighting FOR monopoly fiat money.... It is no coincidence that some 150 central banks now occupy most of the world's countries, when there were but a tiny handful 100 years ago.

http://gold-silver.us/forum/attachment.php?attachmentid=2498&d=1328496947

[jimswift]

I guess I know the answer, but why isn't anybody able to ask this clown any real hard hitting questions?

As much as I enjoy Ron Paul's opportunities to question him, he still is kinda soft on him.

I don't really have a definitive question in mind, but what would be one question that would completely shut him down?

[mamboni]

Bernanke has reduced himself to a shill and a hack for the paper money Ponzi. What a disgrace. Here are some quotations with my response in red:

-"The gold standard sets the money supply and price level generally with limited central bank intervention."

Actually, this is about the only correct statement he has made.

-"The strength of a gold standard is its greatest weakness too: Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions."

The strawman here is money supply. In the free market, the price is the best arbiter of supply versus demand and best governor of balance between the two. Supply of money represents de facto manipulation of the marketplace by an external source. It warps the relationship between supply and demand.

-"All countries on the gold standard are forced to maintain fixed exchange rates. As a result, the effects of bad policies in one country can be transmitted to other countries if both are on the gold standard."

This is nonsense. There is nothing prevent a nation from devaluing or revaluing it's currency versus gold, thus changing the exchange rate. In fact, under a gold standard, a deficit nation would be required to settle it's trade obligation with gold bullion. Since it's gold backing is reduced, it had either to reduce its currency in circulation to restore the correct gold backing or devalue the currency versus gold. The latter made the nation more competitive and tended to correct the deficits by increasing exports. Therefore, a gold standard was continuously self-adjusting, preventing a nation from running chronic large trade deficits and destabilizing debts (like the US has since dropping the gold standard!).

-"If not perfectly credible, a gold standard is subject to speculative attack and ultimate collapse as people try to exchange paper money for gold."

One man's speculation is another's wealth preservation. If the currency outstanding is fully backed by gold, then the people have no reason to excahnge their paper for gold. But if the currency has been overissued due to government largesse and excess, then people will seek to exchange their paper for gold, as is their right under a free market. If there is a run on an individual bank, then perhaps the market is punishing this bank either for it's mismanagment, malinvestment or outright fraud. But in the end the result is self-correcting: a poorly performing bank is put out of business! Gold encourages efficient use of capital!

-"The gold standard did not prevent frequent financial panics."

This is another strawman. The function of gold is to provide a backing to the currency. It is not intended to influence or direct the direction or rate of flow of capital. But under a gold standard, panics are far more shallow and correct far more quickly than under a fiat debt-based monetary system.


-"Although the gold standard promoted price stability over the very long run, over the medium run it sometimes caused periods of inflation and deflation."

Gold does not cause inflation or deflation. Inflation is caused by government overissuance of currency and increased money velocity (i.e. increased spending by consumers). If the economy is growing faster than the rate of growth in the general gold stocks, money tends to slowly deflate (increase in value) on average. This is a good thing as it rewards savers, encourages thrift and engenders capital formation. It discourages excessive debt and punishes speculators. The general standard of living rises, more so for the poor and working class.

-"In the second half of the 19th century, a global shortage of gold reduced the U.S. money supply and caused deflation (falling prices). Farmers were squeezed between declining prices for crops and the fixed dollar payments for their mortgages and other debts."

During the 19th century, the United States enjoyed the greatest period of economic growth, innovation and prosperity in the history of the world, even with sporadic panics, depressions and wars. Also, see my previous comment regarding the relationship between the rate of economic growth versus that of the gold stock.

[Serpo]

Chairman Bernanke’s decision to use the first of his four lectures at George Washington University to attack the gold standard certainly puts the hay down where us mules can get to it. “Ben Bernanke’s first lesson on economics: Forget about the gold standard,” is how Politico led its story. The Fed chairman used a series of slides to guide his remarks to a bright looking group of students. The “strength of a gold standard is its greatest weakness too,” one slide said. “Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions.” Mr. Bernanke insisted he understands “the impulse” behind the gold standard, “but I think if you look at actual history the gold standard didn’t work well.”

The way Mr. Bernanke sketches his lesson one gets the feeling that the whole scheme of the institution he heads is as an alternative to the barbarous relic. So we reached into the stack of books beside our typewriter to see what might be there. The first one we found was “An Adventure in Constructive Finance,” the memoir of Carter Glass, the congressman who led in the creation of the Fed. It turns out that as the Federal Reserve Act of 1913 was moving through the House, it was hit with what Glass calls a “feverish outbreak about an imaginary ‘assault on the gold standard’.” It seems a group of Republicans was concerned that it would rescind the Gold Standard Act of 1900, which had settled the great battle over bimetallism that erupted in the late 19th century.

It turns out that Congress reacted to the assault by adopting an amendment put forth by an Ohio Republican, Simon Fess. It declared, as Glass put it, that nothing in the bill should be construed as a repeal of the law “providing a gold parity for all forms of money.” It was only against that assurance in law that the Federal Reserve Act actually made it through the House. Why Mr. Bernanke leaves this history out of his lecture one can but surmise. He also leaves out the fact that under the Federal Reserve System the dollar has lost something like 85% of its value. Nor does he mention the sheer drama of the collapse of the dollar on his watch. A bit of value has flowed back into it in recent weeks, but it is still below a 1,600th of an ounce of gold.

None of this back-story is in Mr. Bernanke’s lecture. Nor does he dwell on the failures of the Fed itself. The whole reason he is appearing in these classes, in the first place, is that there is a rising tide of distrust of the Fed within the Congress that created it. The bill to audit the Fed started out as one of Ron Paul’s chimeras. Eventually it was passed, albeit in a watered down form, overwhelmingly in the House, and the Fed has been fighting a so-far losing battle against it in court. This has led to Mr. Bernanke to begin his quarterly press conferences, and now his college lectures. It seems he is happy to appear in any place save where his testimony can be compelled.

The question is why, if the Federal Reserve and the system of fiat money are so superior to sound money, has our country been in such a pickle these past few years. The Fed has tried every trick in the book and some that aren’t in the book. Yet so far the economy seems impervious to its monetary ministrations. It has met neither of its dual mandates of stable prices and employment. The Fed chairman did acknowledge that his institution failed at crucial moments, most notably in his view in the Great Depression, when it “did not use monetary policy to prevent deflation,” as he put it yesterday. But what about its failures in the current time, when it has run the value of the dollar down to a level that was once unthinkable and millions are still out of work?

It’s always possible that Mr. Bernanke will confront these questions in the remaining three lectures he is scheduled to give at George Washington, but given the preview yesterday, it looks unlikely. The full accounting of the Fed is going to have to come from the body that created it in the first place. We are less than two years away from the centenary of the institution, and there will be plenty of legislation around which this accounting could take place. One bill, H.R. 1098, would establish a free competition in currency and end the system centered on making legal tender out of the kind of scrip that Mr. Bernanke circulates. No doubt it will be a long battle, and it wouldn’t be surprising to us were some of the bright-looking students to whom Mr. Bernanke spoke yesterday to end up in the lists.

http://www.nysun.com/editorials/bernanke-101/87752/

[Uncle Salty]

Ben needs to read up on Freegold.

Fuck fixing the price of gold. Let it float against all currencies. No fixed exchange rates...ever. Simple. Done. Boom.

[mick silver]

hes just doing what the elite want him to say ... hes the slave boy. they call him an he ask how fucking high are low he needs to jump today