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News Link • Federal Reserve

Lie of the Month: Geithner Says US will Not Engage in Devaluing Dollar

Of course, there may be other “agendas” such as a weakening of the dollar and support for asset prices. This is very dangerous as hundreds of billions of dollars are being “allocated” based on false prices (interest rates). The charade can’t be maintained forever and weakening the dollar only invites others to join the party. And lost in all of this focus on credit is the loss of hundreds of billions in interest rate income for savers. Certainly their spending has been curtailed as a result. Every dollar a borrower saves from some sort of refinance deal is a dollar of interest income lost to savers. Even lenders will lose income as loans with interval rate re-sets will be set based on historically very low Treasury rates (lowering net interest margins). No wonder confidence is low and uncertainty is high, it is hard to make sense of this.

2 Comments in Response to

Comment by Anonymous
Entered on:

 When the Fed "eased" up the market leading to the 7% loss of the value of the dollar, it does not mean that Geithner lied when he declared to the world that the United States would not engage in devaluing the dollar like what China is doing. "Easing" up or "tightening" the market is an everyday function of the Fed that serves an economic purpose. By the way, the Fed and the Treasury are separate entities. In this case, the Fed did its homework and ably performed its role -- it boosted the inventories of big corporations in trouble, and propped up the declining stock market -- objective accomplished. But what the Fed did has nothing to do with the current critical issue of covert currency devaluation in the global scene in relation to international trade which China is doing through the backdoor tremendously profiting from exports to spur economic growth. When economic knowledge is short on this issue, the attack is long, even in the writing of the title as readers can see.

Comment by Powell Gammill
Entered on:

Treasury has no say anyway as the Fed dials up the presses.  And they have already said that is the plan being implemented now.

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