Impossible But Funny Congressional Testimony

Feb 19, 2010 • Thinking Economically • 217 Views    No Comments

You might enjoy looking at the Onion’s parody of Ben Bernanke’s congressional testimony. It never can or will happen this way. And yet, while the testimony is fictitious, the statements about money are based on its actual definition.

The article describes Dr. Bernanke initially talking about interest rates and then pausing while appearing to realize that a dollar bill is just a rectangular piece of paper. Then the Onion “quotes” him saying…
“‘You know what? It doesn’t matter. None of this—this so-called ‘money’—really matters at all.
It’s just an illusion,’ a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him…According to witnesses, Finance Committee members sat in thunderstruck silence for several moments…”
The article concludes with the nation returning to barter:
“’It’s back to basics for me,’ Bernard Polk of Waverly, OH said. ‘I’m going to till the soil for my own sustenance and get anything else I need by bartering. If I want milk, I’ll pay for it in tomatoes. If need a new hoe, I’ll pay for it in lettuce.’

When asked, hypothetically, how he would pay for complicated life-saving surgery for a loved one, Polk seemed uncertain.’That’s a lot of vegetables, isn’t it?’ he said.”

The Economic Life
Any commodity is defined as money if it has three basic characteristics.
1. A medium of exchange: People use it to purchase goods and services.
2. A unit of value: People know how much it is worth.
3. A store of value: When people return to the commodity in the future, it retains a relatively similar value.
Consequently, gold, rectangular pieces of paper, tobacco leaves, beaver pelts, and seashells all have been money at some time.

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