Last night, President Barack Obama expressed confidence in the dollar and declared: “I don’t believe that there’s a need for a global currency.” Normally, that would settle the issue. But in the past 24 hours two of Obama’s top economic advisers have signaled an openness to such a new global currency — in one form or another. What’s going on? Politico’s Ben Smith reports that Treasury Secretary Timothy Geithner said this morning that he was open to a new global currency to replace the dollar, as proposed by a Chinese central banker. Geithner, according to Smith, said that the proposal — which he has not yet read — is less transformative that headlines have suggested. “We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union,” Geithner said. Later, the moderator, per Smith “apparently sensing a gaffe,” asked Geithner to clarify his remarks. Geithner walked back his earlier comments and said he does not see the dollar being sidelined by a new currency. But Geithner wasn’t the only top Obama adviser who refused to rule out a transition to a global currency. White House economic adviser Austan Goolsbee said much the same thing yesterday afternoon in an interview with CNN’s Wolf Blitzer. Although he characterized such a change as “unlikely,” Goolsbee twice declined to rule out such a global currency despite being pressed by Blitzer. “I haven’t seen the details of the proposal,” Goolsbee said. The entire exchange follows:
I don’t know enough about monetary policy and currency to analyze the potential benefits and drawbacks of such a change, though several people I’ve spoken to believe it’s an idea that’s as undesirable as it is unworkable. But as a matter of instilling confidence in the U.S. economy at a time when such confidence is critical, it seems that Obama’s answer was much better than the mixed messages coming from his top economic advisers.
