Thursday, April 17, 2008

Strong dollar policy a "vacuous notion"?

Former Treasury Secretary Paul O'Neill said in a Bloomberg interview today that "The idea of a strong dollar policy is a vacuous notion. It implies in it that somehow we have the ability to manage the relationship between the value of the U.S. dollar and other currencies around the world''.

This is probably the most stupid thing I have ever heard coming from of a government official, albeit in retirement. Of course if that implies that Washington politicians are lying or saying something that they don't mean to say then there is something to it. In other words, if a TS comments on a strong dollar policy this notion has to be backed up by other actions. To support a "strong dollar" and at the same time to tolerate fiscal pillaging and mindless monetary policy is inconsistent to say the least. The proof for this can be easily witnessed in the most recent corporate earnings, where currency adjustments make up for domestic weakness.

KO up19pc/9pc cc
INTC up11pc/>5pc cc

ABT up 14pc/5.5pc cc

This list goes on and on and it shows that authorities fall back to something they can understand - to devalue their way out of trouble.

if you must see - click for video

video: O'Neill Says Strong Dollar Policy Is `Vacuous Notion'
Bloomberg, April 16 2008

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