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Bernanke To Ron Paul: "Gold Is Not Money"

Rep. Ron Paul: "The price of gold today is $1,580. The dollar during these last three years was devalued almost 50 percent. When you wake up in the morning, do you care about the price of gold?"

Ben Bernanke: "Well, I pay attention to the price of gold, but I think it reflects a lot of things. It reflects global uncertainties. The reason people hold gold is as a protection against what we call tail risk, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection."

Paul: "Do you think gold is money?"

Bernanke: "No. It's a precious metal."

Paul: "Even if it's been money for 6,000 years? Somebody reversed that and eliminated that economic law?"

Bernanke: "Well, you know, it's an asset. Would you say treasury bills are money? I don't they're money either, but they're a financial asset."

Paul: "Why do central banks hold it if it's not money?"

Bernanke: "Well, it's a form of reserves."

Paul: "Why don't they hold diamonds?"

Bernanke: "Well, it's tradition. Long-term tradition."

Paul: "Some people still think it's money."

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