Ron Paul Asks Ben Bernanke: How Do You Define a Dollar?

Ron Paul confronts Fed Chairman Ben Bernanke on monetary policy, and says that Fed policy has not helped to stabilize the economy over the last 30 years or so. Paul asks how the Fed can manage monetary policy if it doesn’t have a definition for a dollar. And, he adds, gold is the true long-term measurement of value

Date: 03/02/2011


  • How is gold money? I still don’t understand the logic behind that. Money is:

    1) A store of value
    2) A medium of exchange
    AND 3) Unit of account

    Gold, in any country in the world, does not fit criteria 2 or 3. No financial securities are denominated in gold, gold is not used as a medium of exchange, and therefore gold is not money. A country COULD have gold money by denominating their currency forthwith, but there is no intrinsic quality of gold that makes it money.

  • It looks like Bernanke answered the question in a way that made Paul look… well… wrong. I hate to say it, but Paul has no idea what he’s talking about when it comes to monetary policy.

  • Of course he did: a dollar represents what it can purchase. That’s why the Fed’s charge is to maintain price stability. I would guess that you’ve never taken a course in economics, and if you have, that you didn’t understand it very well. Much like Dr. Paul.

  • We are in deep troubles.

    God help us all.

  • U. professor of economics and sociology Zagreb answer what is USA dollar ?
    USA dollar printed paper currency without backing of goods services or gold it is in deep hyperinflation just a question of time when it starts.

  • Continued: The basic logic for increasing the money supply during a recession (or slow recovery) is as follows: Decreasing real interest rates increases investment. Increasing the supply of money makes money more plentiful in the economy, makes it easier to borrow money, and in the end stimulates aggregate demand, hence increasing output (GDP) in the short run. It’s a monetary tool (designed by economic models) to help counter low-GDP and high unemployment times, like now.

  • Continued: As for printing money: remember that printing money is only one monetary tool the fed allows us. The Fed can also decrease the money supply to keep the economy from overheating or to keep inflation under control. These things are crucial for managing effective monetary policy.

  • Forget about “backing the dollar”. That’s irrelevant to an economy. The only purpose of currency is to facilitate exchanges for goods and services. That’s it. Lots of people say that fiat currency has evolved starting all the way from primitive bartering systems, to exchanging claims on commodities (i.e. gold-backed dollars), to eventually people not caring about the underlying asset and simply exchanging the claim itself as currency.

  • cant wait for this shit to go down hill, thats the way everything is gonna get solved, there’s no other way, unless ron paul wins these elections

  • so what is the backing behind a dollar? and spending trillions of dollars to other countries whats up with that? and seeing as you like the fed reserve im assuming you like the idea of printing money out of thin air? im not really trying to be a dick i just want to know your logic behind all this