Geithner on the US Dollar..

[GoFlyKiteNow]

FISCAL OUTLOOK AFFECTS U.S. DOLLAR

On Friday, Geithner said the U.S. dollar's status as a key reserve currency carries special responsibilities that include keeping spending under control, Geithner said earlier on Friday in an interview on CNBC television.

"It is very important that Americans understand that we need to do everything possible to sustain confidence in our ability to keep inflation low and stable over time and to make sure we're getting our fiscal house in order," Geithner said.

Developments over the past year, when many investors put their money into U.S. Treasury securities and the dollar rose at times, showed there was still a great deal of confidence in U.S. economic management.

"The world wanted to be in Treasuries, in the safest and most liquid markets, and you saw the dollar rose when people were most concerned about the future of the world," he said.

"That is a very important thing. It's not something you can count on. It's something we can understand, and we can continue to foster, and we're going to do that," Geithner added.

The administration has to be careful not to withdraw economic stimulus too fast though, Geithner added. But he denied that the administration was ready to consider a second economic stimulus program.

Geithner said access to credit in the overall economy has improved dramatically but many small businesses that typically create many jobs still face borrowing constraints.
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Apparently, come hell or high water...the US dollar gets its strength from among other things..from the lack of confidence in other reportedly powerful large economies, especially during times of crisis...or shall we say - GDP size of a country is not important !!
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[singveld]

US dollar is going down.
and bring the whole world with it.

 

[longbow]

So is US keeping spending under control? Is the budget deficit going to increase? Can US afford to continue funding its military adventures (will it cut back on its military)? Can it afford to fund its pension system when it comes due?

So unless US can keep spending under control, according to Geithner, its position as a reserve currency will be affected. So far future looks bleak and thus as the world financial community is saying, if US continues on its current path its will likely lose its reserve currency status - we are talking about 10 to 20 year time frame so say it is sooner.

Reserve currency status requires a large GDP as well as a stable financial system, stable economy, no currency restrictions, and military security.

Nobody is going to hold a country's currency if it can be invaded overnight, if it is technically bankrupt or if its finances is in disarray. a large GDP is just one of the necessary components of what makes a reserve currency.

FISCAL OUTLOOK AFFECTS U.S. DOLLAR

On Friday, Geithner said the U.S. dollar's status as a key reserve currency carries special responsibilities that include keeping spending under control, Geithner said earlier on Friday in an interview on CNBC television.

"It is very important that Americans understand that we need to do everything possible to sustain confidence in our ability to keep inflation low and stable over time and to make sure we're getting our fiscal house in order," Geithner said.

Developments over the past year, when many investors put their money into U.S. Treasury securities and the dollar rose at times, showed there was still a great deal of confidence in U.S. economic management.

"The world wanted to be in Treasuries, in the safest and most liquid markets, and you saw the dollar rose when people were most concerned about the future of the world," he said.

"That is a very important thing. It's not something you can count on. It's something we can understand, and we can continue to foster, and we're going to do that," Geithner added.

The administration has to be careful not to withdraw economic stimulus too fast though, Geithner added. But he denied that the administration was ready to consider a second economic stimulus program.

Geithner said access to credit in the overall economy has improved dramatically but many small businesses that typically create many jobs still face borrowing constraints.
.
.
Apparently, come hell or high water...the US dollar gets its strength from among other things..from the lack of confidence in other reportedly powerful large economies, especially during times of crisis...or shall we say - GDP size of a country is not important !!
.