Is Mainstream Banking Bringing Gold Back as Money?

At the Huffington Post, structured securities expert Janet Tavakoli notes that US mainstream banking has began accepting gold as a collateral, she writes,

J.P. Morgan Chase & Co. announced on February 7, 2011 that it will accept physical gold as collateral for investors that want to make short-term borrowings of cash or securities.

Presenting gold to satisfy demands for performance bond collateral has been allowed on the London CME in a limited way since October 2009. As of November 22, 2010, the Intercontinental Exchange Inc. (ICE) has accepted gold bullion as collateral on all credit default swaps and energy transactions.

I don't recall the G-20 declaring gold a new currency. Yet JPMorgan Chase and a couple of financial market exchanges have effectively declared that gold is an alternative currency.

In other words, gold is money.

The market appears to be driving gold back to reassume its lost function—a role stripped away by ideological statists to advance their political agenda which has led to the grandest experiment of nearly 40 years: paper money via the US dollar standard.

And perhaps, such illusion—turning stones into bread—maybe coming home to roost.

As Professor Ludwig von Mises once wrote,

The return to gold does not depend on the fulfillment of some material condition. It is an ideological problem. It presupposes only one thing: the abandonment of the illusion that increasing the quantity of money creates prosperity.