“Fed Chairman Ben Bernanke has been giving a four-part lecture series to the students at George Washington University.
No one really expected it to be much more than a publicity stunt.
However, the first two lectures have made a big splash. First, he systematically destroyed any defense for a gold standard. Then he argued that the Fed wasn’t to blame for the housing bubble.
It is becoming more and more clear that these lectures are actually an aggressive defense of the Federal Reserve.
Given that Bernanke is a sitting Fed Chairman, it’s hard to imagine that he thought these lectures would be overlooked.
Art Cashin, UBS Financial Services director of floor operations agrees. From today’s Cashin’s Comments:
Bernanke At The Barricades – As you recall, last week Fed Chairman Ben Bernanke began his series of four lectures to students at George Washington University. In the first two, he dissed the idea of the gold standard and praised Paul Volcker for courageously wringing runaway inflation out of the U.S. economic system.
It is becoming apparent to many of us that Mr. Bernanke intends these lectures to be a spirited defense of the Fed itself. The critique of the gold standard was more a lecture on why you could not replace the flexible Fed with an inflexible “herd rule” process.
The defense of Volcker was directed at why you need the Fed to fight inflation. You needed us then and you need us now. Watch the two up-coming lectures and other speeches this week. Ben is on the offensive to save the Fed.”
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His defense involved throwing cash around the room and screaming “Make it rain bitches” in between pissing on a bar of gold.
Ben Bernanke tells you gold is not a currency, however the market seems to disagree.
Do the markets really disagree?
How many currencies are capable of a 4% drop on little to no news? Looked like the movement of a commodity to me and I think the markets would agree.
What value does gold have? What industrial processes is it used it? Well over 90% of gold is held for investment purposes. Sounds like a currency to me.
And yet there are very few transactions that can be facilitated with it. Unlike currencies.
We could go back and forth all day.
Personally I don’t really think it’s either. I prefer the title “useless rock that has value based on the idea that it has had value in the past.”
Because the government tells you it is ILLEGAL to use gold in exchanges, not because there isn’t demand for it.
As for your statement about perception of value – what gives the USD its current value when it is just (90%) a number stored in a computer?
USD’s value probably has something to do with it being backed by the largest, most dynamic economy in the history of man kind.
As for your former point, it depends.
Barter transactions between corporations who have exchanged goods for currency in the past are very much legal.
…you say that like it’s a bad thing!
(Disclosure: Net long with minimal PM exposure.)
What I find simply amazing–and I’m not necessarily justifying it or agreeing with it–is that Bernanke can just put a gun to the head of every bear and say: “Make my day, asshole!” It’s just amazing that he can do it with so little. I mean, if you read the statements, there’s very little actually promised. It’s just the merest hint of a threat of a possibility:
“To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.
I also discussed long-term unemployment today, arguing that cyclical rather than structural factors are likely the primary source of its substantial increase during the recession. If this assessment is correct, then accommodative policies to support the economic recovery will help address this problem as well.”