The American Pundit

You know, I don’t want to hear about missteps or mishandlings by the Bush Administration anymore. Careless comments made by Treasury Secretary Tim Geithner, who Obama thinks is doing a great job, sent the U.S. dollar diving against other currencies this morning.

Turbo Tax Tim told a moderator at the Council on Foreign Relations that he’s open to a proposition by the Chinese central bank to create a new reserve currency for the world.

In a blink of an eye, the U.S. dollar has collapsed against the Euro, Japanese Yen and other major currencies. The trigger was comments from Tim Geithner who said that the U.S. is “quite open” to China’s suggestion of moving towards a Special Drawing Right (SDR) linked currency system. If the world adopts the SDR, which was created by the IMF as an international reserve asset, it would mean that countries around the world would need to hold less U.S. dollars. The U.S. is probably open to this suggestion because a weaker dollar is stimulative for the U.S. economy and would relieve the U.S. from having to implement effective monetary policy while balancing the international demand for a reserve currency.

Geithner’s comments indicate that the U.S. is not taking China’s suggestion with a grain of salt and instead is giving it legitimacy. This is extremely important ahead of the G20 meeting. The only question is whether this is another amateur mistake by the new U.S. Treasury Secretary.

Hey, Geithner. Take a hint from your boss’ rhetoric: Words matter.

The dollar pared losses versus the euro on Wednesday after U.S. Treasury Secretary Timothy Geithner said the dollar was likely to remain the world’s reserve currency for a long time.

The U.S. dollar fell to a session low against the euro after Geithner said he was “quite open” to China’s suggestion of moving toward SDR-linked currency system.

It took the moderator revisiting the question and insisting on a “clarification” to stop the bleeding. Apparently he’s more capable of protecting our currency than the Treasury Secretary.

It’s like amateur hour in Washington. Secretary Geithner has shown himself to be incompetent and careless, be it over the AIG bonuses or this latest remark about the U.S. dollar. I understand his toxic asset plan went over well with Wall Street on Monday, but one step forward does not make up for 10 steps back. It’s really time for him to go.

Via Hot Air.