Back in October, Treasury Secretary Tim Geithner gave a speech in which he answered a question about the U.S. dollar. Geithner said that America needed to “work hard to preserve confidence in the strong dollar.” My, oh my, how quickly things change. This week, Geithner said he was “quite open” to the establishment of a new global reserve currency. The dollar plunged upon news of the statement, and one has to wonder, does the Obama administration really support America?
In a column written in October, Lawrence Kudlow focused on Geithner’s comments (or lack thereof) regarding the dollar.
In fact, Geithner has said little to nothing about the dollar during his tenure.
But then on Monday, in a Silicon Valley speech to businessmen, he said the following: “It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to be competitive. . . . It is not a viable, feasible strategy, and we will not engage in it.”
Answering a question at this meeting, Geithner said the U.S. needed to “work hard to preserve confidence in the strong dollar.” And when asked if the dollar would lose its status as the world’s reserve currency, he said, “Not in our lifetime.”
So… is Geithner measuring a “lifetime” in dog years? The Telegraph reports that Geithner “shocked global markets by revealing that Washington is ‘quite open’ to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.”
The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.
“The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.
According to the Chinese plan, there would be a “‘super-sovereign reserve currency’ under IMF management, turning the Fund into a sort of world central bank. The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a ‘widely-accepted means of payments.'”
Despite its weakness, the dollar is still the world’s currency. The dollar grows weaker because of the dire financial situation America is in. But Geithner’s comments only added fuel to the fire. Do Geithner and Obama really seek to promote America or tear her down? If the former, they have a very strange way of showing it. If that latter, then their actions are move beyond criminal. Why would American officials work against the common good of Americans?