The notion that gold is more expensive than ever happens to fit with a larger narrative that also does not square with the facts  namely, that inflation is an imminent threat. This can be a bit confusing, I realize, because inflation plays two roles in the story: past inflation distorts our view of record highs, while future inflation is the concern of some of those people making a big deal out of gold.

But the story itself is fairly straightforward. In the last week, foreign governments and some economists in this country have criticized the Federal Reserve for announcing that it would try to reduce long-term interest rates. China, Germany, Russia and a couple of other countries say the move is an attempt to bring down the value of the dollar. Inflation worriers in the United States say that the Fed can’t keep rates low forever and eventually must wind down its emergency responses to the financial crisis.

On narrow grounds, both groups of critics have a point. The Fed’s move will indeed bring down the dollar. And the Fed cannot continue its aggressive policies forever. But forever is a long way off. Right now, the unemployment rate remains near a 30-year high, and inflation is just 1.1 percent, compared with 2.7 percent when the year began. Meanwhile, the United States is running a large trade deficit with China, Germany and Russia, among other countries.

In this situation, the Fed should absolutely be trying to lift economic growth and employment by reducing the cost of borrowing money. Its mistake, in fact, was waiting so long to do so, even after the recovery began losing momentum in the spring. That the Fed’s move is also likely to bring down the dollar  lowering the cost of American exports, raising the cost of imports into this country and thus reducing some of the world’s trade imbalances  is an added benefit.

Remember, the Fed has a dual mandate: maximum employment and stable prices. The country is about nine million jobs shy of full employment today, at the same time that prices are clearly stable. Not only has inflation itself fallen, but people’s expectations of future inflation, an important indicator to the Fed, have fallen over the last year, according to surveys by the University of Michigan.