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Bernanke Lectures at GWU, Tells the Truth

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March 23, 2012

At least when he introduced himself as “Ben Bernanke.” Then it went downhill.


by Jacob G. Hornberger

In a recent lecture to an undergraduate class at George Washington University, Federal Reserve Chairman Ben Benanke, not surprisingly, blasted the gold standard and praised paper money and the nation’s central bank, the Federal Reserve. He said that it would be impractical to return to the gold standard and that the Federal Reserve is necessary to address economic crises.

Unfortunately, Bernanke’s pronouncements are nothing but standard statist monetary propaganda.

Contrary to popular misconception, the gold standard didn’t involve some sort of exchange rate between gold coins and paper money. Instead, the gold standard simply meant that gold coins and silver coins were the official money of the United States.

Thus, the gold standard didn’t involve some sort of exchange rate between paper dollars and gold coins because there were no paper money (with some periodic exceptions at the state level). I repeat for emphasis: the gold standard simply meant that the American people had chosen gold and silver coins, rather than paper money, as their official money.

From the inception of our nation, our American ancestors rejected paper money in favor of gold and silver coins. The Constitution expressly delegated to the federal government the power to coin money and regulate the value thereof. It’s obvious that the term “coin” refers to coins, not to the printing of money. After all, one does not coin paper money. One prints paper money. The Constitution did not delegate to the federal government the power to print paper money.

To make the matter even clearer, the Constitution expressly prohibited the states from making anything but gold and silver coins the official money for people to use in the states. Moreover, the Constitution expressly prohibited the states from printing paper money (i.e., from emitting bills of credit, a term that meant paper money)…

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image: flickr.com/donkeyhotey/