Of an international currency revaluation agreement announced on February 12, 1973, Volcker wrote:
"That day the United States announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."
In his updated autobiography, Volcker writes of that 1973 currency revaluation:
"The newly agreed exchange rates and gold price ($42.22), in my view, would be highly vulnerable to renewed speculation. To convey a sense of confidence, we should be prepared to intervene collectively to stabilize the gold market: in effect to create a new gold pool. That, unfortunately, was not agreed."
The "gold pool" to which Volcker referred was the London Gold Pool of the 1960s, the mechanism by which the United States and the governments of seven European allies dishoarded from their gold reserves, through the Bank of England in London, to hold the international gold price at $35 per ounce.
The London Gold Pool collapsed in March 1968, overwhelmed by offtake in the face of U.S. inflation caused by government social programs and spending on the Vietnam War:
In correspondence with the German financial journalist Lars Schall in 2012, Volcker defended central bank intervention against the gold price to counter "exchange rate instability at a critical point":
Through the years GATA has discovered admissions by various other central bankers that intervention against gold is far from mere "conspiracy theory" but actually longstanding Western central bank policy. But even with Volcker's new reiteration of that policy, will any mainstream financial news organization or even any monetary metals mining company or gold-advocating investment house try questioning central banks about their policy toward gold particularly and surreptitious intervention in markets generally?
Until that happens, the greatest power of central banks will remain not their ability to create infinite money and apply it to surreptitious interventions in markets but rather their ability to intimidate news organizations out of reporting the cosmic deception.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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