No word from the good prof as yet on the trouble with PAPER.
The topic is interesting and is what caught my eye. Alas, the article reads like it was written by a fawning 8th grader.
Professor Bernanke Explains the Trouble With Gold
By Peter Coy on March 26, 2012
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Bernanke warmed up slowly in his March 20 lecture (the first of four to the same class at GWU), reviewing the basic notion that “to stimulate an economy, you lower interest rates.” But soon he was on to the perils of the “liquidationist” theory of Andrew Mellon, the Treasury secretary who is notorious for advising President Herbert Hoover to “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate … it will purge the rottenness out of the system.” Bernanke told the students: “Sounds pretty heartless and I think it was.”
From there, Bernanke went on to explain how the Fed helped cause the Great Depression by keeping interest rates high to defend the gold standard, and by letting banks fail. Bernanke conceded that a gold standard might keep inflation lower over the long haul, but at the cost of severe fluctuations in economic output. What’s more, he questioned whether a commitment to a gold standard would even be credible. The Bank of England stuck to a gold standard for decades because “everybody knew that their first, second, third, and fourth priority was staying on gold,” Bernanke told the students. In a modern democracy like the U.S., in contrast, the pressure to devalue the dollar to stimulate growth would be irresistible—and speculators, realizing that, would undermine the gold standard by demanding gold instead of currency.
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http://www.businessweek.com/articles/2012-03-26/professor-bernanke-warns-students-gold-and-austerity-are-snares
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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