Wednesday, March 25, 2009

Geithner Resign Now !

The official position of the United States government at this time is that our currency is the US dollar, and that we want it to be a viable and health world currency. In accordance with that position, the US government has rejected calls by the Chinese government to have a world currency that would replace the dollar.

The cornerstone of the Chinese proposal is the idea of pushing the dollar out as a world currency. This could have repercussions on the value of American savings and purchasing power. It should be seen not only as an economic proposal but an extension of China's political aspirations.

The American government response to the Chinese proposal was clear cut. Reuters News reports as follows of Timothy Geithner's response to the Chinese proposal.

In a congressional hearing on Capitol Hill, U.S. Rep. Michele Bachmann, a Minnesota Republican, asked Geithner: "Would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested this morning by China and also by Russia, Mr Secretary?"

Geithner replied, "I would, yes."

She posed the same question to Bernanke, who said: "I would also."

A mere day later, Geithner is singing a different tune. According to, Geithner has today spoken far more approvingly of the Chinese proposals. The following remarks by Geithner hit world currency markets like a slap in the face.

"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 getting our fiscal system back to the point where people judge it as sustainable over time."

If Geithner wants to act like a college professor sitting on the fence and judging between the US and China, there are probably scores of universities that would welcome him with open arms. But Geithner is the Secretary of the Treasury. Any careless remarks by him at the present time could have catastrophic impact. Any talk of downgrading the US dollar by the Treasury could have a major negative effect on markets.

Bloomberg News reports as follows about the world market response to the Geithner proposal.

Treasury Secretary Timothy Geithner sent the dollar tumbling with comments about China’s ideas for overhauling the global monetary system, only to drive it back up by affirming that it should remain the world’s reserve currency.

The article continues further.

The dollar slid as much as 1.3 percent against the euro within 10 minutes of news accounts of Geithner’s remarks. The U.S. currency was down 0.6 percent at $1.3553 as of 12:31 p.m. in New York.

Billions of dollars are made and lost from off the cuff remarks. As a Treasury Secretary, Geithner must surely know that.

My father would say when I did something incredibly foolish," What was going through your alleged mind when you did that?"

I must now pose that question to Geithner.

If drastic action is not taken now, it will appear as though President Obama shares Timothy Geithner's lack of confidence in the US dollar. Timothy Geithner has spoken at length against America's interests. As a representative of the nation's interests, he should support our country and our currency. President Obama should demand Timothy Geithner's resignation. The sooner the better. Geithner has no common sense and no discretion. He is a loose cannon. He should resign now.

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1 comment:

Matt said...

I agree with you that all remarks from that high up in our goverment should be well thought out before speaking. No, he probably does not realize that everything that he utters about our USD is taken seriously and affects the markets.
my own opinion is we have several loose cannons holding high office.