NEW YORK.Â Federal Reserve Chairman Benjamin Bernanke yesterday warned that "virtual" currencies such as bottle cap promotions and Gather Points could set off South American-style "hyperinflation" in the U.S., fueling the current market meltdown.Â His remarks sent the stock market lower in late-day trading as investors interpreted his comments to mean that the Fed would tighten the nation's money supply.
Speaking at the New York Federal Reserve Bank, Bernanke said that "in order to maintain a high standard of living, we need price stability.Â Virtual currencies cause eczema in household pets, and should be viewed with caution."
Dog nearly itches to death.
The Federal Reserve attempts to regulate the nation's economy by manipulating the rate at which it lends money to the nation's commercial banks.Â The Fed's "overnight discount rate" is set based on fluctuations in statistical measures such as "M1", "M2", "eminem" and "Manny, Moe and Jack, the Pep Boys".
Manny, Moe and Jack
Gather points are awarded by readers to writers who post content on Gather.com, a so-called "social media" web site.Â Points are redeemable at participating merchants.Â Â Soft-drink promotions are printed inside the bottle tops of beverages such as Sprite, the refreshing lemon-lime soft drink, and have been linked to low self-esteemÂ among young people who repeatedly receive caps that say "Sorry--you're not a winner."
Gerace:Â "Gather Points are way cooler than the dollar right now!"
Gather founder Tom Gerace took issue with Bernanke's assessment, saying the Fed chairman was responding out of fear of competition.Â "We're gaining on him and he's nervous," Gerace said.Â "Pretty soon all the cool anchor babes like Campbell Brown will be talking to me and not him."
Campbell Brown:Â "Gerace?Â Â Can't say I'veÂ heard of him."
Academic economists said the effect of virtual currencies is still unclear, but that Bernanke's concern was justified.Â "Look at the Euro," said Gary Becker, a Nobel Prize-winning economist at the University of Chicago.Â "Ten years ago those things were worth less than Chuck E. Cheese tokens.Â Now, they're more like Susan B. Anthony dollars--you might not like them, but you'll take them."
GatherÂ points recently received a threshold validation in world currency markets--a Nigerian internet scam.Â "I am a high-ranking government official whoÂ cannot get my Gather points out of the country," read an e-mail received by Gather members last week.Â "If you will give me access to your Gather account I will transfer them to you and we will split the profits when I come to US."
"I'm going to have to re-route you through Albany because I'm taking a two-word challenge on Gather right now."
Bernanke alsoÂ claimed that Gather was contributing to flat or declining productivity in the service sector of the economy, as "knowledge" workers waste time posting, commenting, flaming and creating Photoshop images on the siteÂ during the work-day.Â "Non-farm productivity slipped this quarter, and Gather must share some of the blame," Bernanke said.Â "Once air traffic controllersÂ discover the site, I'llÂ be traveling by bus."