Ron Paul (RP): Very quickly if you could answer another question because I am
curious about this. You know, the price of gold today is $1580. The dollar (??) three
years was devalued almost 50%. When you wake up in the morning, do you care about
the price of gold?
Ben Bernanke (BB): Well, I pay attention to the price of gold but I think it reflects a lot
of things. It reflects global uncertainties. The reason people hold gold is that the
protection against what we call tail risk – really really bad outcomes. And to the extent
that the last few years had made people more worried about potential of a major crisis.
Then, they have golds for protection.
Ron Paul:Do you think that gold is money?
BBernanke: No.
Ron Paul: It’s not money.
Bernanke: It’s a precious metal.
Ron Paul: Even if it has been money for six thousand years, somebody reversed that and
eliminated that economic law?
Bernanke: Well, it’s an asset. Would you say treasury bills are money? I don’t think they’re
money to you but they’re financial assets.
Ron Paul: Why do central banks hold it?
Bernanke: It’s a form of reserve.
Ron Paul: Why not they hold diamonds?
Bernanke: Well, it’s tradition. Long term tradition.
Ron Paul: Well, some people still think it’s money.
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