FED Chairman Ben Bernanke told Congress today that the economy is growing more slowly than expected, and should this anemic growth continue, the FED is ready to launch more stimulus.
“given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate.”
I translated this statement and out came QE3.
The markets seem to have come to the same conclusion, as the major indexes are all up over 1% as of 1:30pm. Gold has jumped to 1585.60.
Speaking of Gold, Ron Paul asked the Bernank an interesting question:
Paul: Do you think gold is money?
Bernanke: (pause) .. No.
Paul: Even if it’s been used as money for 6,000 years… somebody reversed that? Eliminated that economic law?
Bernanke: Well, it’s an asset. Would you say treasury bills are money? I don’t think they’re money either.
Paul: Why do central banks hold it? Why don’t they hold diamonds?
Bernanke: Well it’s tradition. Long term tradition.
Paul: Well, some people still think it’s money.
Classic Bernank!! Sure, the banks could hold gold out of “tradition” but we never really got an answer from Ben on why he thinks gold isn’t money. Is gold a medium of exchange? Is it a store of value? Does Ben even understand this, or is gold just an intrusion on his fiat-money fantasyland? Who knows?
PS: Alyx just informed me that we went through something similar in March.