Not enough metal to put dollar back on gold, Bernanke says

Not enough metal to put dollar back on gold, Bernanke says

Submitted by cpowell on Tue, 2011-03-01 23:47. Section: Daily Dispatches
And plenty of derivatives to keep the dollar off gold.
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Bernanke Unfazed By Gold Standard, Currency History Queries
By Michael R. Crittenden
Dow Jones Newswires
via The Wall Street Journal
Tuesday, March 1, 2011

WASHINGTON -- Federal Reserve Chairman Ben Bernanke defended the central bank's effect on the dollar Tuesday, pushing back at the idea that policy makers should consider alternative proposals like the gold standard.
Bernanke, appearing before the Senate Banking Committee, was pressed by Sen. Jim DeMint, R-S.C., on the viability of a return to a gold-backed economy or the idea of the Treasury Department issuing bonds payable in gold.
Bernanke, who has studied the issue, said a return to the gold standard wouldn't work.
"It did deliver price stability over very long periods of time, but over shorter periods of time it caused wide swings in prices related to changes in demand or supply of gold. So I don't think it's a panacea," Bernanke told DeMint.

Additionally, Bernanke said there were a number of practical issues that would prevent the return of gold as the world standard. Namely, there's not enough gold in the world to effectively support the U.S. money supply.
"I don't think that a full-fledged gold standard would be practical at this point," Bernanke said, declining to opine on the gold-backed bond issue because he was not familiar with the idea.
Sen. Mark Kirk, R-Ill., also engaged Bernanke on the currency issue, questioning whether the Fed's $600 billion bond-purchase program is in effect monetizing the U.S. debt. Bernanke noted that the U.S couldn't have currency outstanding if there were no Treasury securities to back it up, and that even the most steady economic times the Fed engages in the buying and selling of U.S.-backed securities.
Kirk, however, noted that the United States did have currency not backed by federal debt at one time in its history: under the administration of President Andrew Jackson, the nation's seventh president.
Bernanke, appearing amused, was quick to respond.
"So this was before the Civil War. This was during the period where individual banks issued currency. We didn't have a national currency," Bernanke said.
Not to be outdone, Kirk asked whether it was possible for a country to have a currency without a trillion-dollar debt. Bernanke said that was the case"


As I read this, I couldn't help but thinking to myself that his arguement is very one sided. Either gold and other PM's are grossly overpriced or substantially undervalued. It would appear from that the Bernanke has his philosophy wrong, as his true fiat banker mentality shows. He is thinking of Gold relative to current price with a relationship to money supply. AS he sees it, there is not enough gold "at it's current price" to back the massive money supply of the US alone. In real terms he has just supplied the basis for the argument that Gold, Silver and other PM’s are grossly underpriced within this relationship. We can have a gold standard and you do not need more metal to achieve it, the metal just needs to priced in real terms as a relationship to the money supply. This underlying fundamental would imply that the PM's need to be 10's of times higher than their current value. We may very well see this as more citizen's around the world flee their current currencies for the safety of precious metals.

Thanks JC for sending this along. Please post an email address in the comments section so that I can add you to contributors. That goes for silverto500 to.

Been stewing this in my head for a few hours and the Bernanke comments indicate a couple of things to me.

1. When he says we don't have enough gold to cover the US money supply he is correct at the current price. Gold bugs counter "Hey stupid, raise the price as it's obviously wrong".
Right now Gold is sitting in the vaults acting as a piece of the fractional reserve system.
If we revalued gold to say $10,000 overnight that fractional leverage becomes more palatable and countries around the world with gold would find themselves with better balance sheets.
If we revalued to $60,000 an oz. there would be a lot of happy rappers and it would potentially wash away this countries debt if we used it to pay our bills. It seems so simple why not do it? Well for one we wouldn't want to give up our gold. Secondly, we may not have even close to what we have been told we have. Third, to revalue would be to recognize the fractional reserve system as a Ponzi. Are we ready to do that?

2. "We don't have enough gold" meaning we don't have enough gold at any price because we don't have what we told you we have. When was the last time an audit was done and what honest purpose does it serve not to audit?  There is no honest reason not to audit the gold holdings in this country.

3. If we returned to a gold standard without it being on a fractional reserve system some international body would be required to audit what countries say the have.  The so called "free gold" system of FOFOA would come into play. However, it can only work for the USA if we have been honest about our holdings. 

There would be a huge number of knock on effects as well. Mines that were previously not economical would suddenly be worth a fortune. Govt.s would step in and take the lions share ownership of current and future mines. It would create a global re balancing in terms of net worth. Some countries have very limited natural resources whilst others have an abundance.  In theory America would be sitting pretty. It wouldn't necessarily retain worlds reserve status which of course wouldn't suit the bankers.

We are probably at the tail end of a huge Ponzi scheme in all things paper. However, if everyone keeps looking the other way it can continue. It only takes one event to make everyone look at the reality though.
However, Stockholm syndrome and mass lemming like stupidity are not traits that have served us humans well in the long term. It can take generations or it can take moments for us to become aware of of an idea and grasp it. If you knew you were in the Matrix and had to choose between what is and what you want it to be which one would you choose? If you are reading this stuff you are at least one foot in the Neo camp. Which one do you think all your neighbors choose and will they continue to choose to remain plugged in? They may pile in lemming like towards gold $5000 or $6000 but will they know why other than that is the way the crowd is running?

We have heard from the words from the Bernanke and we can see his reality is starting to crumble based on his own words. It's tough to keep lying when you know the truth absolutely and it comes out in little Freudian slips.

Will you be having the Red pill or Blue pill tonight Sir?


JC said...

The Bernanke finds himself in a bit of a quandry as the creator of the "Taylor Rule" which Bernanke references every time he gives testimony in front of congress has said that Bernanke is misinterepting the rule and using variances that the creator of the rule, John Taylor, did not endorse or approve. Big Bad Ben has indicated that the creator had approved this alternate provision in direct confrontation with Senator Toomey. Senator Toomey said that the creator even believes the FED Funds rate should be higher by now. This is what Mr. Taylor had to say; "I did not propose or prefer an alternative rule in that 1999 paper, and it is hard to see how one could interpret the paper that way." Big Bad Ben seems to create any provision that benefits his agenda of filling the TBTF Banks with as much money as possible to try and keep the massive derivative exposure at bay. Personally, I believe there is no way possible to avoid this landmine and with the additional firepower of the mortgage crisis, fraudclosure, MERS nightmare and pending lawsuits; it is game over. We are in the forth quarter, down by 40 with 30 seconds left on the clock.

It would not surprise me one bit if all the FED Presidents had a nice big stash of gold and silver themselves.

Jack C

Louis Cypher said...

Who was it that said recently only a retard would have no gold or silver?