He managed to talk down the dollar. It’s like he doesn’t even care about it, or US sovereignty in general.
Can someone remind me again why this tax cheat (who is now in charge of the IRS) is “indispensable”?
[Thursday morning update]
More thoughts from Jim Lindgren.
[Bumped]
[Update a few minutes later]
“I wish the Admin could bring back the days when Joe Biden had sole possession of the gaffe-o-matic.”
A commenter makes the point of what is so worrisome about this:
I’ve been following the currency issue for years, and repeatedly over the past 10-15 years, the Saudis, Iranians, Russians and others have been pushing for an alternative reserve currency. The prime reason is mistrust of the United States fiscal policy.Now the Chinese, our largest creditor, have joined the chorus. Frankly, the only thing saving the dollar right now is that no one trusts any of the other major currencies.
It really doesn’t matter what Yglesias says or does, the global markets are speaking. Obama and Geithner are now “welcoming’ such a discussion. Basically we are looking at the downfall of the dollar similar to that of the Pound Sterling back in the 1970’s. The sun is setting on American economic leadership unless the grown ups act responsibly. To me, this is economic treason.
And the treason is not in going along with a second reserve currency per se, but in making it seem necessary to much of the rest of the world due to insanely reckless fiscal policies that are debauching the dollar.
[Update late evening]
Welcome, Instapundit readers. I’m glad that Glenn linked this post, but it’s not the one that I sent him (which means that he looked over the rest of the site and picked it out). Anyway, you might want to do the same.
You hit on the secret, Geithner, like the man in charge, his wife, and his followers, they care not a bit about US Sovereignty. Quite the contrary, they believe a Global Currency, like a UN “Global test” for foreign policy, is a long overdue remedy to the inequity of America being on top for so long. There’s no way to believe anyone who’s seen the inside of a college econ class can be this stupid much less a man of Geithner’s resume. On the other hand, an administration run by a freind of Rev, Wright and Bill Ayers not caring about the loss of US power and prestige is as suprising as the Eastern Sunrise. This isn’t Carter 2, it’s the Fifth Column.
Um…AFAICT, nobody was proposing getting rid of the dollar and replacing it with a global currency. What they were proposing is creating a reserve currency that was based on a basket of currencies (including the dollar, yen, euro, and some others). Not exactly the same thing. And quite frankly, if other countries in the world no longer want to use the dollar alone as a reserve currency, it’s their prerogative.
~Jon
Not so say that I think that Geithner isn’t an idiot, and that his policies aren’t leading to a pretty big fall in the value of the dollar. Just trying to keep the tin-foil-hatiness out of the conversation.
~Jon
Rand, you might find this rather uncomplimentary take on Geithner’s previous Heroic Rescue interesting.
According to former Ozzie prime minister Paul Keating, Geithner fatally misdiagnosed the financial crisis in East Asia in the 1990s and designed an enormous IMF rescue program that was so disastrous in its results that the IMF became poison in East Asia, and (the story goes) this contributed to China’s determination to save their dollars (and buy Treasury bonds with them) insetad of spend them internally, helping sustain the US credit bubble.
It’s an interesting story, in part for its hideous deja vu sense — if true, it suggests that Geithner is sort of a Typhoid Mary of international finance, the kind of guy sensible people would pay to stay away from anyone’s money other than his own (and given his tax situation, maybe his wife should have insisted on handling his money, too).
It’s also interesting because of the Asian connection with Obama: Geithner, too, grew up in part in Asia. Want to bet that’s what recommended him to The One? The equivalent of GWB’s Texas friends, I suppose.
Now, cue Jim for the ritual ad hominem attack. Paul Keating? Don’t you know he fucks kangaroos? Underage kangaroos, while snorting coke and fuel oil? Don’t believe anything he says! Plus, of course, the happy dance alternative-reality alternative explanation. Of course the IMF became poison in East Asia after their response to the financial crisis, but that was just coincidence, the real reason was their refusal to give stimulus money to Hong Kong whorehouses, many of which were run by the Chinese army. Or — even better — the 180 degree doublethink counter-assertion Nonsense! The IMF was very successful in East Asia and widely admired today. Santa Claus released a press release just the other day on the subject.
I like this harsh statement fromt the article particularly:
Soeharto’s government delivered 21 years of 7 per cent compound growth. It takes a gigantic fool to mess that up. But the IMF messed it up. The end result was the biggest fall in GDP in the 20th century. That dubious distinction went to Indonesia.
Similarly, I expect it takes an even larger, more mature fool to destroy the 25 years of economic development and prosperity the United States has enjoyed and take us back to the miserable 70s. But maybe we’ve just elected one.
…quite frankly, if other countries in the world no longer want to use the dollar alone as a reserve currency, it’s their prerogative.
Who said it wasn’t? That doesn’t mean that the Secretary of the Treasury should be encouraging it.
It has been longing been the contention of the progressives that dollar is solely responsible for US hegemony. The current administration will do anything to rid the world of the US hegemony
Folks…what in the hell are we going to do? There appears to be a dearth of leadership for responsible, constitutional government…the congress, both parties, seems to be conducting business as usual and the country is going down the tubes…it is going to take more than tea parties, isn’t it?
Global reserve currencies don’t just happen. There are requirements.
1. Size. The financial system must be big enough to handle global currency flows.
2. Strong, transparent legal system.
3. Value stability. Nobody wants to use a currency that might be inflated to worthlessness.
Of the three, only the third is currently in question.
There is one other element that is necessary, but is rarely noted: military strength.
As long as we are fielding 12 CBGs, as well as the only military with a global reach (weak though it is on the ground, it is still far stronger than anybody else, almost anywhere in the world), attempts to supplant the dollar will fail. That is an unspoken reason why the Euro hasn’t been accepted as a substitute.
We had a stable global reserve currency about a century ago. It was called gold. That was before governments wanted to stretch their currencies to the point of breaking in order to finance their continual expansion. I’m all for Treasury secretaries trashing a purely fiat currency as long as they can offer a better alternative. Unfortunately, that’s more than I would expect from an empty suit like Geithner.