"And though tyranny, because it needs no consent, may successfully rule over foreign peoples, it can stay in power only if it destroys first of all the national institutions of its own people."

Saturday, November 10, 2007

Paulson Says U.S. Currency is the Chosen One

U.S. Treasury Secretary Henry Paulson certainly didn't have a problem complying with the Federal Reserve commands to print money from thin air, that they stopped keeping records of. He usually speaks only when there is something to cover up, and he's been really flapping his jaws as of late. The U.S. Dollar closed at a stunning new low of 71.11 Friday amidst the speculation that the Fed will cut interests rates again, and it sank to new lows against other major currencies as well. Paulson wants the world to buy his bluff that the worldwide economy will screech to a grinding halt if something were to happen to the U.S. Dollar's reign as the world currency. That may be, but it doesn't mean it won't happen, because in a lot of ways, it's happening already. He says that America is the biggest economy in the world, but everyone knows that there is plenty of competition right now for that spot.

Reuters

Treasury Secretary Henry Paulson on Friday defended the dollar's status as the world's reserve currency, saying the U.S. economy's strength, openness and competitiveness would "shine through" the current market turmoil.

"The dollar has been the world's reserve currency since World War II and it's been that for a reason. We are the biggest economy in the world, we are as open as any economy to investment, to trade, and we've had stable economic policies ... we've had good productivity," Paulson told reporters at an impromptu news briefing on Friday.

Paulson repeated the administration's oft-stated mantra that a strong dollar is in U.S. interests and that currency values should be set in a competitive marketplace.

He acknowledged he has heard questions about the status of the dollar as the world's preferred reserve currency. While the housing downturn and credit market turbulence are likely to have an impact on the U.S. economy, there is underlying strength, he said.

"I have no doubt that looking out over any reasonable period of time, you're going to see our strong economic fundamentals in this country shine through," he said.

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