from Adrian Ash:

“Allegations that the world’s major central banks actively work together to suppress the price of gold were only given credence in 2004 when Paul Volcker – chairman of the US Federal Reserve at gold’s all-time top – said in his memoirs that “letting gold go to $850 per ounce was a mistake” during the last great bull market in gold bullion.

At one of the policy meetings led by Volcker in late 1979, his Federal Reserve committee noted the threat of “speculative activity” in the Gold Market. It was spilling over into other commodity prices. One official at the US Treasury called the gold rush “a symptom of growing concern about world-wide inflation.”

“We had to deal with inflation,” as Volcker said in a PBS interview of Sept. 2000. “There was a kind of great speculative pressure.

“It was the years when everybody wanted to buy collectibles from New York. The market was booming, and other markets of real things were booming – because people had got the feeling that things were inflating and there was no way you could stop it.”

But besides waving a gun at anxious gold owners, there seemed only one other route to stopping speculators profiting from – or rather, defending themselves against – the demise of the Dollar.

Fix it up with higher interest rates. The Volcker Fed took US interest rates to 19%…and put the real cost of Dollars above 9% after adjusting for inflation. The Gold Price sank almost in half inside 12 months.”

“The price of gold is pretty well determined by us…But the major impact on the price of gold is the opportunity cost of holding the US dollar…We can hold the price of gold very easily; all we have to do is to cause the opportunity cost in terms of interest rates and US Treasury bills to make it unprofitable to own gold.”

price fixing is at the core of the FED’s “central planning” job duties.

The key point is that David Hale (who was mistaken at key points in 1982 and 1987) “PARAPHRASED” Bernanke. That’s what the article says.

I’ve read more than 30 papers on monetary policy by Bernanke (far more than this unknown reporter and likely more than David Hale) and it’s obvious from even a cursory reading of them that Bernanke understands the limited role of the Fed. This is not rocket science.

Let’s hear the actual tape. Obviously there were lots of other reporters there and no other reporter commented on what would have been a truly stupid and shocking statement, had it occurred.

Let’s hear the tape, before we rely on some third hand report that “Paraphrases” Bernanke’s comment.

Matthew Dubuque

Another classic example of complete double think from our Republican ‘ideologues’

Stop pushing such condescension.

It will destroy your brand and yourself.

That said, he can’t control everything. The past year has shown us they worry more about systemic risk, but I think there’s a part of them that follows what the markets say and they sometimes give in to Wall Street (Jim Cramer tirades).

“So the Fed has fallen victim to mission creep. Its self-assigned expanded role has given it responsibility with only partial ability to execute.”

Messiah complex.

I’ve met David Hale and feel sure that he would be conscientious about quoting Bernanke accurately.

But surely “stabilizing the dollar” and “controlling commodity prices” are well down on the Fed’s list of priorities, in the midst of toppling financial institutions.

After all, even as crude oil has bubbled higher for the past seven years, the Fed has dismissed its significance by using core PCE and core CPI to say, “That don’t matter.” NOW they’re suddenly concerned about commodity prices? Concerned about them rising or falling? If they didn’t matter on the way up, why do they matter on the way down?

And has the U.S. EVER cared about the external value of the dollar, whose holders it has shafted over and over through the years?

In other words, unless Bernanke’s remark was taken out of context, he’s lost his grip on the order of priorities. When your house is on fire, you don’t worry about fixing that leaky faucet.

The larger issue, which has concerned me for years, is that a $900 billion entity is (as Yves says) not remotely big enough to rule the markets. I asserted when Bernanke came on board that he would be remembered for growing the Fed’s balance sheet at a fantastic rate, perhaps $100 or $200 billion a year.

Well, it’s already happening, but big chunks of the various term facilities are being treated as off balance sheet. It’s not clear to me that this accounting convention is valid.

Bernanke is playing with fire, because a real meltdown would bring a fierce surge of populist political anger. If he escapes lynching, Bernanke may well see the Federal Reserve nationalized and made a directly-ruled creature of Congress. If so …

Rock on, gold! Dollars to dimes, in the blink of eye!