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March 25, 2009

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Wow. That's some weapons grade crazy. Admirable poker faces on Geithner and Bernanke.

I, for one, welcome our Khazakistani monetary overlords. I just want to know what the new fiat currency is called. Anybody?

Yeah, Geithner's expression was great. "These are the people I need to get authorization for nationalization from?"

A commenter over at Balloon Juice says that what's going on is a dog whistle to the Rapture crowd. Apparently, a new, global currency is a big deal in the Left Behind books. There's no way that I'm going to pick one of them up and read long enough to know whether that's true. That would make a bit more sense than it just coming out of the blue.

Clearly you're not a Slacktivist regular, but you're quite right. A single world currency is on the checklist.

Actually, the governor of the People's Bank of China apparently has called for a new global reserve currency that is not the currency of any single nation, somehow working through the IMF. Still a reserve currency, but the proposal does seem to be for the creation of something new rather than just switching to some other existing national currency as the typical reserve currency.

Well, Bachmann is mostly nuts. But Geithner and Obama were lucky the question was mishandled, because as I understand it a new reserve currency is a bigger threat to the U.S. than some bogus new global currency.

i believe her full name is Michelle ArmedNDangerous Bachmann.

as I understand it a new reserve currency is a bigger threat to the U.S. than some bogus new global currency

And why would that be the case? What does it matter if we count money in dollars or in zloties?

Because by borrowing in dollars, our debt is in money we can print, which makes it easier for the US to handle things like ginormous debt. Which should be addressed anyways, but.

And yes, it's definitely a dog whistle to the Rapture crowd.

I caught part of that press conference, and the part that struck me was the second part of that guy's question, where he tried to work in the words "communist" and "socialist" as many times as possible.

follow-up questions makes it harder for a President to be flatly unresponsive, and this is a very good thing.

Huh? (via Insty)

He made no notable news, and did so quite smoothly. Unless sticking by his guns over cutting charitable deductions is news.

And the former constitutional law professor did go on in his answers, perhaps not by accident. Holding the floor is another means of control for any president. Like males hold the TV remotes.

The result: only 13 questions in 57 minutes.

And as The Ticket noted during its live-blogging, not one single question on either war, including the one the commander-in-chief recently ordered 17,000 more Americans to march into.

Nothing holding the president to account for the conflicting timelines over who knew what when about the stunning AIG bonuses. Nothing asking him to detail the incredible appearing $40 billion in savings he claims to have discovered in defense spending.

Even when the president was confronted with a blunt question if he'd accept the budget without certain favored provisions, he passed up the chance for a clear answer for one re-expressing his confidence that after the legislators have their way with the proposal, he'd get his budget the way he wants it. That's the standard bargaining stance this early in the process, even when the president's own party controls both sides of Capitol Hill.

When you’ve lost the LA Times…

When you’ve lost the LA Times…

the author of that piece is Andrew Malcolm.

would you be surprised to learn that he was formerly Laura Bush's press secretary ?

Google his name + Obama. he has a long history of playing fast and loose with facts.

Yes, the "global currency" is a dog whistle to not only the rapture crowd but the New World Order crowd.

It does matter a lot though what the reserve currency is because that is the primary reason why everyone has funded our massive trade deficits. Or were funding them (a link to a post of mine).

Also, it's not exactly a new "currency" they are calling for but expanding the SDR and encouraging that to become the gold standard for everything. It is unclear to me if that would actually be used as legal tender, or merely a store of value that central banks can use to to hold reserves and them make their own legal tender off of. There is a difference, because if it were a normal currency that means that there would have to be a global central bank, but if it maintained its present (but expanded) structure, then the banks wouldn't change, and it would just be a neutral currency exchange rate that represented the sum of the individual currencies.

It'd also have an enormous impact in the dynamics of trade I'd imagine. If private contracts were written in SDR then trade dynamics from currency devaluation/appreciation would basically be gone, and it would be largely destabilizing I'd imagine.

You can almost hear them thinking: currency, reserve currency: what's the difference? Sigh.

I'm a little confused: The Fox report is correct. A new reserve currency is a new currency; assuming that one would be adopted, folks in the US could hold the new currency just as they hold dollars. Bachmann is nuts: her entire line of questioning was a complete waste of everyone's time (as started to show on Bernake's face).

By the way, there have been calls for a global currency for quite some time. There has always been concern that holding dollars as a reserve currency is risky. It's not implausible, particularly as the dollar gets devalued (via Fed policies) and US deficits grow.

Actually I'm not sure what it'd do to trade dynamics. Thinking about it more, it could keep the same benefit for exporting that weakening currencies provide, but the effect wouldn't be as large....but the volatility wouldn't be as much either which can be a big problem in trade. So it might be a net neutral.

That and also it could be a good way to partition off global capital and make the global system less connected. That'd be a huge deal because that's a big cause for this crisis. So I guess that'd be a large positive.

All of this is assuming that it's not actually legal tender within countries. If it were truly a global currency then I think that'd be very bad; we'd have problems like Ireland and Spain are having but 100 fold.

And why would that be the case? What does it matter if we count money in dollars or in zloties?

We can't print money anymore with no consequences. We're instantly Argentina, only worse. Wouldn't be pretty.

I just want to know what the new fiat currency is called. Anybody?

The Esperantollar

I, for one, welcome our Khazakistani monetary overlords. I just want to know what the new fiat currency is called. Anybody?

The obvious answer to that question is Buellers, no?

Borats

On the Daily Kos recommended diary list is a diary that compares Obams's handling of the press corp with the way a very good teacher handles dumb and/or disruptive students:

A good professor does not humiliate his/her students. I teach education, and one of the points I make to my students is, "you'll have students in your own classes who will ask what seem like disruptive and/or just plain stupid questions. The best way to deal with a disruptive question is to treat it with care and respect - breathe slowly while you answer; the best way to deal with a stupid question is to try and figure out what the questioner is actually hoping to find out...and respond to their underlying concern by helping them to articulate their own question more effectively."

President Obama was asked a few pretty dumb questions today, but his responses showed consideration and respect for the questioner. The "race" question, for example. The reporter formulated her question extremely vaguely, and it was impossible to tell what she wanted to find out. The Professor treated her with thoughtful attention while he mulled over her words, and he arrived at a workable model of her underlying concern. (snip)

Similarly, there were a number of disruptive questions. In a classroom, the students who ask disruptive questions are seeking status in the tribe; they will attain maximum status if they succeed in unbalancing the classroom dynamic. Their underlying concern is their own personal/tribal status; the actual content of their question is almost completely irrelevant. The correct professorial response is to recognize that disruptive questions are indicative of individual students' status concerns...and therefore simply humiliating the student is counterproductive (either creating an enmity or reinforcing a pre-existing one). Rather, a pedagogically appropriate approach is to confer limited status, in ways that reinforce the student/teacher hierarchy. One of the ways this can work in class is to engage the student in a memorable exchange. If a student asks a smart-ass question designed to trip you up, your best bet is to elevate him or her a bit by treating the question seriously and thoughtfully...before you deliver a putdown.


I think that this is right on the money. And the Rightwing Noise Machine meme that Obama is too controlling is a de facto acknowledgment that he is indeed handling the self aggrandizing status seeking behavior of reporters like Todd and Faux and Ed Whatshisname very well.

Go on over to Kos: it's worth reading the whole thing.

Yeah, not the first time a Fox personality has dog-whistled the NWO set and end-times conspiracists who are convinced that 'Obama = Antichrist'.

But to do so at a presidential press conference, during the biggest economic crisis since the Great Depression?

They aren't even pretending to give a f*ck any more.

They aren't even pretending to give a f*ck any more.

nope. they're really not. it's pretty clear that they've decided to go Full Wingnut.

OT but notable: Roubini is guardedly supportive of Geithner's bank bailout. Details at GOS.

A single world currency is on the checklist.

One World Gummint! It's on its way.

Once they put the fluoride in the water, it was all over but the shouting.

Roubini is guardedly supportive of Geithner's bank bailout. Details at GOS.

GOS?

@ russell:

GOS = "Great Orange Satan", i.e. Daily Kos .

When I watch this clip, it doesn't make me think that Michele Bachmann is stupid. She's stupid like a fox. This line of questioning is going to get her huge attention. After all, here we are talking about it.

Presumably, it's her political calculation that that attention will have a positive effect on her fundraising and re-election prospects.

Great Orange Satan. Kos.

If it isn't called either "florin" or "guilder," I'll be very disappointed.

Matttbastard, Cleek: the global currency issue is a real one. Leaving aside the potential end-of-time issues it generates, it's worth discussing because China and Russia will raise it at the G20. If US debt hits 1.0 of US GDP, as is projected, I predict that it'll become a real possibility with real consequences for the US (none of them good).

Spacebucks. Quatloos second choice.

assuming that one would be adopted, folks in the US could hold the new currency just as they hold dollars

Now, that's a great use of the passive voice by von to try to drop a landmine in the conversation. odd that no one's focused on it yet.

As the Constitution points out, only the federal government can determine the coin of the realm. The only way that folks in the US could lawfully USE the new currency in the US would be if the federal government changed the law. (Like when the EU member states adopted the euro as domestic currency.)

Of course, what China is talking about has nothing to do with this; it is proposing a new reserve currency. Instead of buying oil in dollars, China is threatening to buy oil in Wollars (world dollars). Of course, China needs for its counterparties to accept Wollars, and to agree on the components of national currencies that make up the Wollar.

If China can obtain agreement on Wollars, (a) that's bad for the US economy, for reasons written above and (b) no American will be carrying Wollars, because they won't even exist. It would be only a virtual currency until such time as our government agrees to abandon the dollar and move to the Wollar.

It would be only a virtual currency until such time as our government agrees to abandon the dollar and move to the Wollar

If there was a world currency and it was also the reserve currency and it wasn't the dollar I'd guess people in the U.S. would be using it, legal or not. Just like Zimbabwe uses the U.S. dollar now. No compulsion required, quite the opposite.

As the Constitution points out, only the federal government can determine the coin of the realm.

You sure about that? I think the Constitution only says that the federal government can establish a currency and the states cannot. Nothing in there saying that it can ban the use of a currency. By that logic, barter is illegal.

Do these apocalyptic lunatics release that the world has already had a global currency, the gold standard, about a century ago?

I never cease to be amazed by how brazenly insane and ignorant right-wing politicians are allowed to be in this country.

Back on planet Earth, the Euro's status as an alternate reserve to the US dollar has been rising for some time, and I think a great many people expect that trend to accelerate now, given that the Fed's response to the current crisis is to print money, and the EU response is more conservative. I think the great worry for the US is that the dollar's relative decline reaches a tipping point at which point China and such countries start dumping it on a large-scale.

"I think the Constitution only says that the federal government can establish a currency and the states cannot."

Actually, what it says is that the states can't make anything but gold and silver coins currency, and gives Congress the authority to coin money without saying that it can be fiat, and not even implying that it could be printed.

As far as the Constitution is concerned, states COULD establish their own currencies, as long as they stuck to gold and silver.

The only way that folks in the US could lawfully USE the new currency in the US would be if the federal government changed the law.

Yes, but von was talking about holding the new currency, not trying to spend it in the US. I don't think that's quite the same thing.

this just proves that President Obama knows what he's responsibilities are as a president and that he is truly an open minded person and knows how to listen to the people's questions. he may not know all of the answers but at least he shows that he try.

Now, that's a great use of the passive voice by von to try to drop a landmine in the conversation. odd that no one's focused on it yet.

As the Constitution points out, only the federal government can determine the coin of the realm. The only way that folks in the US could lawfully USE the new currency in the US would be if the federal government changed the law. (Like when the EU member states adopted the euro as domestic currency.)

Whhaaaaa? There are stores along the US-Canadian border that will accept Canadian dollars; US companies make payments in Euros, Yen, etc. all the time; and I suspect that a good portion of us have investments held in securities valued in something other than US dollars. Heck, not to long ago an art gallary in New York (IIRC) accepted (required?) payments in Euros.

This is very different from the powers set forth in Art. I, Sec. 8.

Somebody help me out here. I think I understand what a world reserve currency is and why it is important from the US viewpoint for that to continue to be the dollar. On the other hand, it seems that the budget request going forward, about which there were questions in the press conference, coupled with the bailout and stimulus packages are the elements presenting the greatest threat to maintaining the US dollar as the world reserve currency. Last night, I did not hear any retreat from Obama's proposals for new expenditures for new initiatives in healthcare, education, energy, and environment that are big contributors to massive increases in the deficit in the out years.

Am I completely missing something here?

"Back on planet Earth, the Euro's status as an alternate reserve to the US dollar has been rising for some time, and I think a great many people expect that trend to accelerate now, given that the Fed's response to the current crisis is to print money, and the EU response is more conservative. I think the great worry for the US is that the dollar's relative decline reaches a tipping point at which point China and such countries start dumping it on a large-scale."

Posted by: byrningman

If the dollar loses its preeminence as a reserve currency, if "the dollar's relative decline reaches a tipping point at which point China and such countries start dumping it on a large-scale", the interest rates on US national debt will increase dramatically. I have frankly wondered increasingly over the last 6 years why the rest of the world has been so comfortable with US dollars.

This is obviously a touchy subject. But shouldn't somebody try to explain that there are dangers to insulting China, or causing it to consider its options?

I think the Rapture crowd and the New World Order crowd cross-pollinate quite a bit.

"Last night, I did not hear any retreat from Obama's proposals for new expenditures for new initiatives in healthcare, education, energy, and environment that are big contributors to massive increases in the deficit in the out years."

Am I completely missing something here?

Posted by: GoodOleBoy

In the short term, important to stimulate US economy because it is operating undercapacity. Ideally in the good years budget surpluses- as Canada has done- so that can do deficit spending in the recessionary years. But your starting point doesn't change the need for government to spend.

But in Obama's view, in the medium term the US isn't going to prosper unless it changes structural weaknesses, too much of GDP being spent on healthcare so he wants to invest to make it more efficient; too much money on imported oil so he wants to invest in green technologies; too little being spent on education so US will be at competitive disadvantage -(look at how India/China are progressing) unless invest in education.

Obama doesn't see his focus areas as "expenditures" but "investments". If he is right, will strengthen US economy. The world will be more comfortable if they see US investing rather than withering away through 1930's Hoover approach.

Of course also depends who you believe understands the history of the Great Depression. May want read Krugman or the Canadian born economist John Kenneth Galbraith, that field was one of his specialties. Galbraith's son is the James Galbraith frequently writing on the economy.

I don't know anything about economics but that is what I have understood from watching the game being played.

Johnny Canuck:

Thanks for you summary. I agree with your conclusion that Obama sees the items I drew attention to as 'investments' as opposed to 'expenditures'. This does not make my puzzlement go away. First, this difference in view or terminology will hardly make a difference to the rest of the world as it assesses our dollar's continued role as world reserve currency. Second, there is somewhere here buried an assumption that an investment by the taxpayer through the offices of the federal government will produce a more suitable result than can a comparable investment in the private business sector. Is the recent venture of the feds into the energy arena through subsidizing production of corn ethanol an example of the kind of performance we should look forward to? I'm just saying...

Johnny Canuck,

I did miss commenting on one point in your analysis that I think is off the mark. 'too little being spent on education' is not the source of any issues and /or problems we have. Spending money in the wrong places or in the wrong ways maybe, or totally approaching the process of education in the wrong way, or allowing some associated with the business of education to unduly profit from it (maybe even when the institutions profiting are classified as non-profit for tax purposes). We do not need any new expenditures for education that result in a net overall increase in education spending.

Fwiw, I didn't mean to suggest that the reserve currency point is unimportant. But Bachmann and Fox were clearly asking whether we were going to adopt a new currency, period. And that's insane.

(Of course we could hold a new currency, whether or not it was used by others as a reserve. I have a small stash of Pakistani money, and some UAE dinars, waiting for my next trip. Whoop de do.)

I think that we should learn from history and that the new world currency should be the solidus, which basically maintained its value (or at least its gold content) for just over 500 years. The Byzantine Empire survived everything thrown up against it prior to this.

GoodOleBoy: "First, this difference in view or terminology will hardly make a difference to the rest of the world as it assesses our dollar's continued role as world reserve currency."

It isn't the difference in terminology but the actual difference to which expenditure put. If "investment" leads to higher output down the line, then country richer; more economic power your country has the more it gets its way.

" Second, there is somewhere here buried an assumption that an investment by the taxpayer through the offices of the federal government will produce a more suitable result than can a comparable investment in the private business sector."

Yes, which may or may not be true. I don't think one way or the other is correct all the time.

Three examples: The US space program involved investment by government. I don't think any private company would have taken the risk. But hasn't the technology spun over into the private sector, benefiting the overall economy greatly? I suspect the same could be said about your military. Great way to train pilots; mechanics; and I assume also significant technological spill over.

Your health care system consumes 15% of your GDP. Canada's 11% of ours. Our life expectancy is higher than yours. Your system is more costly and producing inferior overall results. Since private enterprise has been doing an inferior job, shouldn't you see whether government can make the private system more efficient?

Both of our countries had railways that were heavily subsidized by government in 19th century by gifts of land. Come the 20th century the subsidies have gone to highways and planes. The railways haven't kept up; and don't have the capital to catch up. When I visit Japan I am impressed by their high speed railways at speeds of 200 miles per hour and sometimes 5 or 6 intercity trains per hour; and by their commuter railways. Maybe even more so by the latter. There is a circle line in Tokyo so that you can get around much of the city in 30 minutes; trains running every 3 minutes.

Who but government could make the capital investment?

GOB,

Why do you assume that education is not a valid investment? You seem to be saying that any expenditure on education will simply result in excess profits and wasted efforts. I find it curious that you single out education for this assumed result, rather than, say, defense spending.

If any area of expenditure has potential to become an investment in our future, it seems education would be at or near the top of the list. Yet you single it out as the ONE area where any expenditure would be a waste.

This looks like pure bias to me, because I've been hearing it from conservatives who want public education to go the way of government. Am I wrong, or did education just pop out of your mouth out of habit?

the "single world currency" issue is indeed a dog whistle to the end-of-time religious right armeggedon is coming crowd. here's just one representative link:

http://frankdimora.typepad.com/the_last_chronicles/2009/03/leaders-asking-for-one-world-currencymarch-11-2009.html

Johnny Canuck makes the important observation that Obama views additional expenditure as "investment." But Obama can have his cake and eat it too: he can minimize the disastrous impact that such investment will have on the interest rates on US debt by convincing the rest of the world that our "investment" will pay off -- and pay off not only for the US electorate, but for the rest of the world as well. How does he do this? One way would be to present the US as the "indispensable nation"--not on the basis of arms, but on the basis of what makes us admired by the rest of the world, including China (believe it or not): our political stability, our sense of decency and fairness, and our honor. I assume that the President knows he has this challenge (however he will decide to address it), and my admiration for this man's ambition just rose tremendously. As a supporter, I honestly pray that he can pull it off. If he does, he's one for the ages.

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Whatnot


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