President Barack Obama's nominee for Secretary of the Treasury, Timothy F. Geithner criticized China for deliberately devaluing its currency in order to keep its prices relatively low compared to the rest of the world, according to an article appearing today in the Washington Post. Missing from his comments, however, was an admission that the United States has been engaging in similar practices lately.
Geithner has been under fire for not knowing how to report taxes properly while at the International Monetary Fund (IMF). While it's a reasonable charge, the better question is why doesn't Geithner consider the dropping of trillions of new dollars into the money supply to be a form of monetary manipulation? Despite talk that the intention is to make the dollar strong, the current monetary policy can only lead to inflation of the money supply and thereby weaken the dollar's value. In fact, re-inflating the economy is the stated central aim of all the bailouts and new money creation since late last year.
The Post's article suggests that China will take umbrage at Geithner's charge, but it remains to be seen whether China will accuse the U.S. of engaging in the same practices that China has engaged in.
Republicans and Democrats alike in the Senate are praising his candidacy, and it appears that he is a shoe-in for confirmation. This fact clearly shows yet again (as if we needed another reminder) that neither the Republicans nor the Democrats believe in fiscal sanity or responsibility. Since the primary purpose of the IMF is to waste huge amounts of money created out of thin air to provide "aid" to countries that mostly ends up in the pockets of governors and bureaucrats and has accomplished nothing in terms of improving the standards of living in those countries, one can only assume that Geithner intends to pursue the same, monumentally wasteful practices once he is confirmed.
God help us.
©2009 Walt Thiessen, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Friday, January 23, 2009
Last modified: Friday, January 23, 2009
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Reader Comments:
Posted By: Master C
Date: 2009-01-23 09:18:36
Walt,
Saying that the US and China "manipulate" the currency is like saying that Walt Whitman manipulated words, or that Roger Clemons manipulated curve balls.
Those who actually understand the process call this "monetary policy" which is using money supply changes and interest rate policy to affect economic outcomes.
I guess you should go back to manipulating that car that you drive or manipulating that fork that you use. We wouldn't want you to think that there was something unusual about that, would we?
Master C
Posted By: Walt Thiessen
Date: 2009-01-23 09:41:56
Uh...Master C, apparently you didn't notice, but I categorized this article under "Monetary Policy" when I published it.
Posted By: Master C
Date: 2009-01-23 10:33:23
Walt,
Categorizing your article under Monetary Policy, then calling it MANIPULATION is like categorizing David Copperfield under Magic, then calling it WITCHCRAFT!
The proper USE of words is part of being HONEST. Saying that your mother "manipulated" the cookie dough when she baked those cookies might make us ALL a little uneasy about eating them. Aren't you just trying to IMPLY something that you can't otherwise reason against?
Of course, that's not an uncommon tactic of those who have weak arguments, anyway.
Master C
Posted By: gene
Date: 2009-01-23 12:13:35
Hi Walt, I read the article you linked and it doesn't mention what the Chinese were doing with the yaun that Geithner was criticizing. What could they possibly do that we haven't done many times over? is he that out of touch or do our policymakers actually view things in that light, that what we do is fair but when other countries do the same, it is unfair? In reality, if we were to let our currency find its own level by sound policies, what would it matter what any country did with their currency? The whole thing is baffling.