Moral Outrage
Whew! God help us!

The U.S. Govt content with keeping the dollar weak

In his recent visit to Beijing, President Barack Obama was in no position to push China around as far as letting its currency rise against the dollar.

Doing so would benefit the U.S. economy by making American-made goods cheaper in China, but the U.S. is reluctant to upset Beijing. China is the No. 1 lender to the U.S. at a time when the latest annual budget deficit hit a record $1.42 trillion. That makes for a lot of Treasurys to be sold.

Treasury Secretary Timothy Geithner, at the Asia-Pacific Economic Cooperation finance meetings in Singapore last week, repeated his mantra that “it’s very important to the United States that we have a strong dollar.” But the administration has done nothing to halt the dollar’s slide. Some have seen that as a signal that the U.S. feels a weak dollar relative to major currencies, other than the yuan, helps U.S. exports.

But with the United States reliant on foreigners to finance nearly $8 trillion in publicly held debt, it can’t openly back a weaker dollar. Doing so would cause investors to dump dollars. The dollar would sink, U.S. interest rates would likely surge and the fledgling U.S. economic recovery could risk collapse.


No Responses to “The U.S. Govt content with keeping the dollar weak”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: