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Central Banks: "Gold Is Money"


No, you didn’t hear them actually say it. In fact, Bernanke says quite clearly “no” – gold is not money. But their actions speak much louder than words. The Financial Times reports that central bank gold buying is at a 40-year high. In other words, whereas central banks have primarily been net sellers of gold since the crash of the Bretton Woods system, they are now net buyers – and quite heavily so.

This is especially the case in rapidly growing economies such as the People’s Republic of China. So while European and American central banks are (still) selling gold and “investing” in paper currencies/fiat monies, the developing world is going heavy on what used to be the world accepted means of exchange. As the West goes down the tubes, the “new” economies are not only growing in terms of wealth and prosperity, but they are also adopting sound money. Meanwhile, we are getting rid of paper money for the sake of saving money – and replace it with digital ones and zeroes. (But at least we have “more money” than they do!)

So if we look to what central banks do and not to what they say, then Bernanke was quite obviously lying. In case anyone thought differently…


Contact Per Bylund

Per Bylund is associateprofessor of entrepreneurship & Records-Johnston Professor of Free Enterprise in the School of Entrepreneurship at Oklahoma State University. Website: PerBylund.com.

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