Is gold money? Don't ask Ben Bernanke

[rocketdog]

I love the way he has to stop and think about it:

http://libertycrier.com/finance/ron-pau ... n-bernanke

[moda0306]

Well we don't use it to commonly transact goods. It may be a monetary metal and phenomenal store of value in the right environments, but I don't know where it actually serves as commonly used money. 

[melveyr]

I like to think of things on a continuum of "moneyness."

The concept of perfect money is an ideal that is never actually reached. You can approach it but you never quite get fully there. Kind of like the platonic forms of "circle" or "square". I have never seen a perfect circle or square in my life, just things that are closer than others. I would say gold is pretty far up on the list of "moneyness" and I would challenge Bernanke because I think Treasury bonds are pretty far up on the "moneyness" scale as well.

However, I definitely don't agree with the dogmatic claim that gold is money and nothing else is.

[Ad Orientem]

Gold is an extra-national currency. After the US Dollar it is probably the most widely recognized store of value in the world and I know of no where in the developed world where one could not exchange gold for goods and services. You might have to first convert it into the local paper currency, just as you would have to trade in your dollars for Euro's in Italy. But I'd be hard pressed to come up with anywhere that gold doesn't get you what you want to buy.

[moda0306]

Melveyr,

That's a great way of putting it. I'd also point out that since money has multiple roles, this means there are multiple metrics from which to measure something's quality as money. As a medium of exchange and unit of account, a society might use almost strictly the state/bank-run fiat currency, but people may have huge problems with using that currency as a store of value, and try to divest themselves of their fiat stuff to hold gold or financial assets.

And those are just the user traits of money, not the intrinsic qualities (divisible, durable, transportable, and noncounterfeitable).

So there are even more metrics we can measure something's quality as money... And only one really talks about whether we actually use something in our daily lives as money (medium of exchange).