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Ron Paul Should Learn From Bernanke's Heroism

Chris Baines
July 19, 2011

What is bravery? Is it fighting a lion? Rescuing a princess? Saving the world from flesh-eating cockroaches bent on the destruction of Earth?

Hollywood would have us think so about all those things, but the truth is, none of those acts is very brave if the main character is invincible. After all, even a coward would save Earth from flesh-eating cockroaches if he or she were made out of Raid.

Bravery comes from doing the right thing even when it is very frightening to us. The more afraid we are of something, the braver we are when we actually do it. Bravery cannot exist without first being afraid, and we can never be heroic if not brave.

And by that measure, Federal Reserve Chairman Ben Bernanke is a very brave man. And, I reckon, a hero.

Consider the recent showdown between Bernanke and his arch-nemesis, Rep. Ron Paul (R-Texas). Paul challenged Ben Bernanke over whether gold is money.

Voice noticeably quivering, Bernanke went ahead and told the truth. It isn't.

Why gold isn't money
For something to be money, it has to be commonly exchanged for goods and services. Last time I checked, I couldn't take a gold coin into McDonald's and receive their oh-so-golden French fries in exchange.

Similarly, stocks -- as much I love them -- are not money or currency, either. If I want money for them, I'd have to sell shares. Furthermore, I couldn't get a direct price quote on, say, my Dell shares in terms of ounces of gold. I’d have to exchange my shares for dollars first and then, if I'm so inclined, exchange those dollars for gold.

But no matter how right he is, Bernanke had reason to be fearful in answering Paul. Bernanke was reappointed in 2008 by the thinnest margin ever, and the man challenging him was a politician who is a stone's throw away, as chairman of the Domestic Monetary Policy and Technology Subcommittee, from being his de facto boss. (The nearest would be President Obama.)

When was the last time you told your boss -- on national television, no less -- to stick it where the sun don't shine? That's brave.

Keep in mind that Bernanke didn't have to answer that way. He could have weaseled out of the question by saying, for example, "Well, it depends on how you define money." Or he could have explained it in Greenspan-speak that would be unrecognizable to the human ear. He even could have agreed with Paul but offered some caveats. Instead, Bernanke mustered his courage and explained his (correct) position in no uncertain terms.

Please stop it, Ron Paul
I don't doubt that Bernanke's opponent is sincere in his gold evangelism. Congressman Paul's personal portfolio is practically a gold-mining ETF unto itself, with a beefy $500,001 to $1,000,000 stake in Goldcorp (NYSE: GG  ) , $250,001 to $500,000 stakes in Newmont Mining (NYSE: NEM  ) and Barrick Gold (NYSE: ABX