The Real Reason Ben Bernanke Resists the Gold Standard

The true value of our paper dollar, my good man, is exactly ¢4.

Bill Wittman of AR 8:42AM May 04, 2012

America: so corrupt. so deeply criminal, so greatly distorted, so xenophobic, so filled with hubris, so convinced of a false pride, so astoundingly mesmerized by the Great Corporate American Propaganda Machines, that when confronted by an alternative like the Chinese Yuan, even now, as the sands of time shift, the fortunes of empires drift, even they themselves cannot see the truth as it gently nudges them into Third-World ship, their paper loses face, and their Military Might is undone by oil shortages and superior technologies they themselves cannot understand, from an Asian logic, capable of undoing their secrets, their spy drones.

America the Three Hundred Year Reich, passing now. entrenched in the machinations of its former glories, locked forever by its Capitalists in failure, and losing even its sacred "U.S. Dollar" witnessed by the paltry amount of gasoline it buys today. There is no denying the fact.

Uncle B 3:27PM May 03, 2012

It's not so much "trading in gold" that counts, it's who owns it at a national level......If our government has "control of the world's gold in it's coffers", we in affect hold the "trump card" on all things economically.

Nixon screwed up the most by sellling our gold reserves. No. We need to hold on to the reserves, as it is the only "sure thing" when it comes to wealth for a nation.

THETRUTH2U of MI 11:09AM May 03, 2012

Mr Rickards,

You are of course absolutely correct, the issue is only one of price. Britain and the US triggered the deflation of the Great Depression by incorrectly setting the price of gold.

What intrigues me about your article is that you are at once 100% correct in your observations about Mr Bernanke and gold's role in the monetary system, and yet you deftly avoid the plainly obvious resolution to the entire situation: not fixing the price of gold at all, but letting the market freely and dynamically arrive at this valuation itself.

Can you comment on why you do not address this?

Of course, whichever way we look at it, all credit denominated in gold (aka paper gold) cannot be part of this valuation because the very reason for gold's value in the first is its lack of counter-party risk. Credit is counter-party risk, by definition.

I don't think that we need wait for the monetary authorities to be honest about how much rampant money printing has already debased our currencies, the market will freely establish that in its pricing of physical gold before then. As you noted "This adjustment will take place eventually - it always does", but it will "involve a one-time hyperinflationary spike in all hard asset values and a concomitant destruction of paper wealth."

Regarding Mr Bernanke's attitude to gold I am reminded of Gandhi's comment: "First they ignore you, then they ridicule you, then they fight you, and then you win".

Don't bet against gold.

Manco of DC 10:59PM May 01, 2012