Wednesday, March 25, 2009

Geithner's dollar gaffe

"Oops! My bad." That was Tim Geithner's response after causing the dollar to tumble 1.3% due to his remarks at a Council of Foreign Relations event.

In response to China's calls for a new international reserve currency to replace the U.S. dollar Geithner said, "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".

Moments later he was prodded by the event moderator to revise his statement, "I’d like to ask one final question, in effect on behalf of the market. Let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world’s key reserve currency?"

After the reminder that he was speaking in a public forum Geithner responded this way, "I think the dollar remains the world’s dominant reserve currency." Not exactly a total rebuttal of his previous statement but enough to calm the world markets.

Geithner must have forgotten that he was not speaking in some private forum like the Group of Thirty (G30) and spilled the beans on the plans of the International Bankers to replace the dollar as the world's reserve currency. Remember that Geithner and People’s Bank of China Governor Zhou Xiaochuan both are members of the G30 which is a private organization founded by David Rockefeller. It's highly likely that this is a topic that has been thoroughly discussed in those private meetings and an agreement has been reached.

It must be confusing for Geithner to try to remember to pretend that the US central bank and the Chinese central bank are at odds with each other whenever he is speaking in public, while secretly cooperating with them behind closed doors. He probably felt so at ease in the CFR forum (another Rockefeller organization) that he temporarily let down his guard. I'm sure he will get a stern lecturing from fellow G30 members Volker and Summers to "get it together man!"

You really can't blame Tim. He's not accustomed to the public spotlight. He was thrust into his role as Treasury Secretary by the banking elite. They didn't seem to take into account that Tim is essentially a technocrat that thrived in the secret world of  the Federal Reserve. They knew that another Wall St. executive like "Hank" Paulson would have a tough time being confirmed. And they were afaid to install Larry Summers because of his infamous free flowing mouth. Perhaps they thought his youthful appearance would win over the American public.

As it has turned out Geithner has been a disaster. There have already been calls for his resignation after just two months. Obama has had to repeatedly defend him and recently joked on 60 minutes that even if Geithner offered his resignation he would say "Sorry buddy you've still got the job". Geithner must be bumming.

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