Tuesday, April 26, 2011



You have to love this story on Bloomberg that highlights Tim Geithner's commitment to a strong dollar policy.  Now that the dollar has broken long term support, you would expect the head of the US Treasury to come out and defend our currency right?  Wouldn't he detail the plan for stabilizing the fall and highlight that the US needs a stronger dollar to be successful as the leader of the world of global finance?

Perhaps you'd expect that, but this is what you got instead.

“Our policy has been and will always be, as long as at least I’m in this job, that a strong dollar is in our interest as a country,” Geithner said in remarks at the Council on Foreign Relations in New York. “We will never embrace a strategy of trying to weaken our currency to try to gain economic advantage.”
Hmmm.  Statements like this want to make me laugh.  Please play the clip below.
(Link) View more The Simpsons Quotes and Sound Clips and Nancy Cartwright Sound Clips

See, even if you believed for a moment that Mr. Geithner was actually telling the truth it would not matter much because while he is busy talking about how a strong dollar is in our best interest, you have several other parties that could care less.  Those three parties of course are the CONgress, the Fed, and those in the office of the President.  Since Congress and the President gleefully spend, spend, spend, and US Treasury and the Fed joyfully participate and facilitate their stupidity, we receive results that stand in stark contrast to the words of Timothy Geithner.

Our Executive and Legislative branches spend and our Fed and Treasury support "asset prices" through crushing the US Dollar.  Anyone see where much of the increase in the market indices gains come from?  Yes, since March 2009 the overall markets have rebounded significantly.  However, see where that performance started to flatten out last year?  That was when the latest version of QE was announced.  Suddenly the SP500 rallied another 100 points or so and the dollar got shelled for about 12% in declines.   

Geithner didn't disappoint though, he did tell us what this miracle strategy should look like. 
Geithner said today that the U.S. needs a “credible strategy” to reduce its budget deficits over time, without moving too quickly and choking off economic recovery.
“You have to commit to bring the budget deficit down to a level that will put our overall debt burden on a declining path as a share of the economy,” he said. The Obama administration wants to move onto that path by about 2015, he said.
Wait there are even more nuggets of brilliance!
Geithner also said Congress needs to act by June to raise the debt limit, saying it would be “irresponsible” and “unacceptable” not to act. “The idea that the United States would take the risk people start to believe we won’t pay our bills is a ridiculous proposition,” he said.
That's another one that has you scratching your head.  When you are running a deficit of $1 Trillion, or $2 Trillion dollars, does anyone believe that you are paying your bills?  No, I don't think anyone thinks we are paying our bills or actually have the ability to do so in the future.  I think we all know that this is going to end very, very badly.

I think this graphic of UGA (Gasoline) says it all.  UGA is up more than 100% since the March 09 lows too.
I can't wait for tomorrow's barrage of truthfulness from Ben Bernanke.


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