The price of gold struck another record high on Wednesday, touching $1,588.90 (U.S.) an ounce as Europe's debt crisis stoked demand for quality assets.
But is gold money?
Believe it or not, that was the question Fed chairman Ben Bernanke faced in front of Congress today.
The outspoken libertarian Ron Paul, a Congressman from Texas, challenged Mr. Bernanke on the way the economy works.
Paul: Do you think gold is money?
Bernanke: (pause) No.
Paul: It's not money?
Bernanke: It's a precious metal.
Paul: Even if it has been money for 6,000 years, somebody reversed that and 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, but they're a financial asset.
Paul: Why do central banks hold it?
Bernanke: Well, it's a form of reserves.
Paul: Why don't they hold diamonds?
And so on. It's a shame that the 75 year-old politician has announced he won't be running for re-election to Congress. But he is running again for the Republican presidential nomination in 2012.
For the video of the exchange and commentary see The Atlantic or the Pragmatic Capitalist.