The Dog That Didn’t Bark

Chairman Bernanke hadn’t even finished his press conference when an investor of our acquaintance who was watching on television sent over an email describing the event as the “illusion of transparency.” We’re not sure the blame attaches solely to Mr. Bernanke, in that the person holding a press conference is never the only player. There are also those who ask, or fail to ask, the questions. In any event, it’s hard to see much illumination in a press conference in which the chairman of a central bank whose currency is collapsing fails to utter even once the word gold.

That is the stunt that Mr. Bernanke managed to pull off this afternoon. He spoke of inflation only in terms of the consumer price index. His willingness, even eagerness, to signal that there was unlikely to be a third round of quantitative easing suggested to Evan Lorenz, who was covering the event for the Sun and for Grant’s Interest Rate Observer, that he was acknowledging that inflation is on the horizon. “Inflation ahead,” is the headline the Drudge Report, which has been one of the keenest observers of the dollar collapse, put up over a second headline, “GOLD RECORD— AGAIN.”

Even as the chairman was speaking, the economist David Malpass pointed out in a telegram this afternoon, the dollar lost value, dropping to a 1,529^th of an ounce of gold. Yet not a word about gold at the press conference. Call it the dog that didn’t bark. The chairman spoke of the high cost of gas without once acknowledging that the price of gasoline is lower in value — meaning it takes less gold or silver to buy it — than it did at, say, the start of President Obama’s term. The president seemed oblivious to this irony when he spoke in his radio address over the weekend of how there is no “silver bullet” that will deal with the soaring gas prices.

What the silver price actual shows is that it’s not the gasoline that’s going up but the dollar that’s going down. So it’s just bizarre for Mr. Bernanke to be talking of a “strong and stable” dollar, which he did, Mr. Malpass pointed out, three times in the press conference. The result is what Mr. Malpass called “a disconnect between the rhetoric and the policy” because “the dollar is neither strong nor stable and the U.S. hasn’t supported it.” Said Mr. Malpass, a former official under President Reagan: “For years, Treasury and the Fed have acted as if the current value of the dollar qualifies as “strong and stable.” This severely undercuts the credibility of Treasury and the Fed on the dollar.”