When Rep. Ron Paul, R-Texas, asked him in July whether gold is money, Fed Chairman Ben Bernanke proved how being a so-called leading scholar in his field is rendered absurd when one lacks common sense.

Following is a transcript of the interchange:

Ron Paul: “Do you think gold is money?”

Ben Bernanke: (…long pause…) “No. It’s a precious metal.”

Ron Paul: “Even if it has been money for 6,000 years, somebody reversed that and eliminated that economic law?”

Ben 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.”

Ron Paul: “Why do central banks hold it (gold)?”

Ben Bernanke: “It’s a form of reserves.”

Ron Paul: “Why don’t they hold diamonds?”

Ben Bernanke: “Well, it’s tradition. Long-term tradition.”

Ron Paul: “Some people still think it’s (gold’s) money.”

Besides the fact that many central banks around the world are stocking up on gold, as are investors, perhaps the ultimate objective arbiter of gold’s value are thieves.

An Associated Press story appearing on Sept. 6 noted that, “After a summer of brazen attacks on gold stores, parts of downtown Los Angeles now look more like a militarized zone than a commercial corridor.”

Meanwhile, Reuters reported that, “As the price of gold rests near record highs, people from Spokane to Bangkok are selling jewelry or buying bullion, some are giving up steady jobs to take up panning, while theft of gold chains and watches is on the rise worldwide.”

Thieves’ behavior, we think, is a better indicator of the value of gold than the judgment of our Fed chief.