This Is The Best Answer We've Seen To The Question: Is Gold Money?


On Wednesday, when Bernanke was doing his Humphrey-Hawkins testimony, Ron Paul asked him if gold was money. The Fed chairman said “no.”

We wrote about it here.

The best response, though, comes from a trader (who will remain anonymous), who sent the following out:

One thing that riled me a bit this week was Ron Paul’s questioning of Ben Bernanke on whether gold is money.  After questioning, the established tin-foil haberdashery contingent went wild about how “silly” Ben was made to look.  Even people you’d think might know a thing or two about money like JP Morgan’s FX strategist Ken Landon decided it was time again to pile on and mock with the hyperinflationistas. 

To be clear here: money, from the Latin moneta, means “medium of exchange.”  I do recognise that clearly gold is an asset and one might argue that it is relatively liquid and regularly is exchanged.  However, the medium of exchange on nearly every gold transaction taking place in the world today is in sovereign issued currencies

So unless you know of some market where gold is the functioning medium of exchange it’s prima facie absurd to even make the argument.  If you’re not convinced, try to buy your post-market-close drinks today with unmarked metal and please let me know how that goes.

Point. Set. Match.

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