“Gold standards are far from perfect,” Bernanke said. “ They waste of resources,.” citing Milton Friedman’s quip about taking gold from one hole in the ground just to transfer it to other hole.
Gold standards are far from perfect because government bureaucrats have always been in charge of managing them. The mere fact that heavy costs and resources are involved to mine the yellow metal is one of the factors making gold a perfect money.
A gold-shackled currency takes away central bank flexibility, which bothers Bernanke. But the question is, how much Bernanke flexibility can the dollar stand before it falls apart completely?
The Fed Chair admitted that the gold standard provides price stability–but only in the long run. He stressed that there have been short-term periods of price inflation and deflation under gold. Well sure, prices increase and then correct, that’s what a gold standard does. Under central bank management prices just increase; either slowly, quickly, or catastrophically.
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Here is were Bernanke is coming from:
www.thedailybell.com/3661/Central-Banks-Now-Operating-as-One-Global-Monopoly
Ed K