Geithner 'open' to China proposal

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Geithner 'open' to China proposal
by Ben Smith

Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal by the governor of the China's central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and "evolutionary."

"I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue," Geithner said, saying that however his interpretation of the proposal was to increase the use of International Monetary Fund's special drawing rights -- shares in the body held by its members -- not creating a new currency in the literal sense.

"We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union," he said.

"The only thing concrete I saw was expanding the use of the [special drawing rights]," Geithner said. "Anything he’s thinking about deserves some consideration."

The continued use of the dollar as a reserve currency, he added, "depends..on how effective we are in the United States...at getting our fiscal system back to the point where people judge it as sustainable over time."

President Obama flatly rejected the notion of a new global currency at last night's press conference.

UPDATE: Evidently sensing a gaffe, moderator Roger Altman told Geithner that it would be "useful" to return to the question, and asked if he foresaw a change in the dollar's centrality.

"I do not," Geithner said, adding several forceful promises, including, "We will do what's necessary to say we're sustaining confidence in our financial markets."

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White House Open to Global Currency?

Last night, President Barack Obama expressed confidence in the dollar and declared: "I don't believe that there's a need for a global currency."

Normally, that would settle the issue. But in the past 24 hours two of Obama's top economic advisers have signaled an openness to such a new global currency -- in one form or another. What's going on?

Politico's Ben Smith reports that Treasury Secretary Timothy Geithner said this morning that he was open to a new global currency to replace the dollar, as proposed by a Chinese central banker. Geithner, according to Smith, said that the proposal -- which he has not yet read -- is less transformative that headlines have suggested. "We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union," Geithner said.

Later, the moderator, per Smith "apparently sensing a gaffe," asked Geithner to clarify his remarks. Geithner walked back his earlier comments and said he does not see the dollar being sidelined by a new currency.

But Geithner wasn't the only top Obama adviser who refused to rule out a transition to a gloabl currency. White House economic adviser Austan Goolsbee said much the same thing yesterday afternoon in an interview with CNN's Wolf Blitzer. Although he characterized such a change as "unlikely," Goolsbee twice declined to rule out such a global currency despite being pressed by Blitzer. "I haven't seen the details of the proposal," Goolsbee said. The entire exchange follows:

BLITZER: The Chinese suggesting today, this dollar, U.S. dollar, should be replaced as international currency, because they are beginning to have concerns that you are printing, the U.S. government is simply printing too many of these dollars and will lose its value as an international currency.

What's your reaction?

GOOLSBEE: It strikes me as probably unlikely.

Different people have in the past argued for world currencies or new -- new currencies before. I believe the U.S. at this point is the safest place to invest in the world. And it's likely to remain that the dollar is a critical currency in the years ahead.

BLITZER: So, you -- you don't like some new international currency that some Chinese are proposing?

GOOLSBEE: Well, look...

BLITZER: I assume that's right, right?

GOOLSBEE: I haven't seen the details of what they are proposing.

I mean, the dollar is the dollar. If people don't want to buy it, they don't buy it. But I think you have seen sort of a flight to the dollar in -- in times of trouble.

I don't know enough about monetary policy and currency to analyze the potential benefits and drawbacks of such a change, though several people I've spoken to believe it's an idea that's as undesirable as it is unworkable. But as a matter of instilling confidence in the U.S. economy at a time when such confidence is critical, it seems that Obama's answer was much better than the mixed messages coming from his top economic advisers.

[JBond]

You know what they are planing. I know what they are planning. It is not being kept secret, yet goofballs on this board will continue to defend Obama and his minions as the continue to dismantle everything that made America the freest most successful country in the history of the world.

We made it over 200 years. It was a good run.


p.s. the formatting of your post is showing up oddly on my computer. not sure if is the post or my computer.

p.s.s. never mind. it's fixed now.

[iceberg]

i don't wanna backtrack a lot, but didn't thabigp talk about what we were doing would spawn a push for a global currency?

[ArmoredSaint]

Further evidence that Turbo Timmy is not ready for prime time.

[trickblue]

Originally Posted by ArmoredSaint

Further evidence that Turbo Timmy is not ready for prime time.

He wasn't even ready for April 15th every year, apparently...

[MetalHead]

He needs to resign.

[ScipioCowboy]

[ThaBigP]

Originally Posted by iceberg

i don't wanna backtrack a lot, but didn't thabigp talk about what we were doing would spawn a push for a global currency?

Oh, I'm just makin' it all up. And I'm crazy. I wear a tinfoil hat and live in my mom's basement waiting for the black helicopters to come and kidnap me to remove the RF implant the aliens put inside me when they abducted me while I was researching the "truth" behind 9/11.

It certainly couldn't have been simply paying attention to what the world (as well as members of our own government) have been either saying or hinting at for some time now. Nor the fact that we are (ironically enough) shredding our dollar by printing so many, very likely forcing us into such a system like-it-or-not, else we have a complete collapse of our monetary system. Again, ironically, by causing a complete collapse of our moentary system.

[Beast_from_East]

Originally Posted by JBond

You know what they are planing. I know what they are planning. It is not being kept secret, yet goofballs on this board will continue to defend Obama and his minions as the continue to dismantle everything that made America the freest most successful country in the history of the world.

We made it over 200 years. It was a good run.

RESISTANCE IS FUTILE, YOU WILL BE ASSIMULATED!!

[ThaBigP]

Originally Posted by Beast_from_East

RESISTANCE IS FUTILE, YOU WILL BE ASSIMULATED!!

"Assimulated"? Is that...an arse simulator?

[MetalHead]

Originally Posted by ThaBigP

"Assimulated"? Is that...an arse simulator?

Sadly,that's someone actually going to college.

[MetalHead]

Originally Posted by ThaBigP

Oh, I'm just makin' it all up. And I'm crazy. I wear a tinfoil hat and live in my mom's basement waiting for the black helicopters to come and kidnap me to remove the RF implant the aliens put inside me when they abducted me while I was researching the "truth" behind 9/11.

It certainly couldn't have been simply paying attention to what the world (as well as members of our own government) have been either saying or hinting at for some time now. Nor the fact that we are (ironically enough) shredding our dollar by printing so many, very likely forcing us into such a system like-it-or-not, else we have a complete collapse of our monetary system. Again, ironically, by causing a complete collapse of our moentary system.

Oh,c'mon..you are being paranoid.
People are happy,everything is fine and dandy...this is America,too big to fail.

[ABQCOWBOY]

Dollar tanked yesterday after that statement by Timmy.

[TheKey]

Check that one off the list...

Let's see, world peace is the last one left...