Dollar Devaluation is “Not Going to Happen In This Country”

Treasury Secretary Timothy Geithner vows that neither he, the Federal Reserve or the White House administration is going to devalue the US Dollar:

“It is not going to happen in this country.” Geithner told Silicon Valley business leaders of devaluing the dollar.

Geithner broke his silence on the dollar’s protracted slide ahead of this weekend’s meeting of finance leaders from the Group of 20 wealthy and emerging nations in South Korea, where rising tensions over Chinese and U.S. currency valuations are expected to take center stage.

“It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive,” Geithner added. “It is not a viable, feasible strategy and we will not engage in it.”

Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to “work hard to preserve confidence in the strong dollar.”

Geithner, normally reluctant to publicly discuss currency and market movements, has not uttered the so-called “strong dollar mantra” — a refrain he helped create at Treasury in the 1990s — since February.

Recent reports suggest that the US government has committed or back-stopped up to $23 Trillion to keep the system afloat, and Ben Bernanke indicated that the Federal Reserve will engage in what is being referred to as QE2, or further monetization of US debt.

The only option, in the end, will be for the United States to either devalue the US Dollar or default on the debt owed to foreign creditors.

Both options lead to a completely debased dollar down the road.

And, if history is any guide, just because Mr. Geithner, Bernanke or President Obama make predictions, doesn’t mean they’ll come true.

Remember – at one time Ben Bernanke predicted that the sub prime crisis was isolated and under control. Prior to that, in 2005, Mr. Bernanke said that a housing bubble was a, “pretty unlikely possibility.”

VP Joe Biden said earlier this year that we would create 4 million jobs.

In June of 1930, when a delegation came to ask President Herbert Hoover to assist with a public works program his response was, ”Gentlemen, you have come sixty days too late. The Depression is over.”

What our elected officials and their appointees say and what is actually happening are two completely different things.

Reference: Reuters, SHTFplan