Once again, the government cavalry has ridden out to assure us mere mortals that fears of dollar devaluation are unfounded.
Treasury Secretary Timothy Geithner talked tough on the U.S. dollar Tuesday, saying that the United States will never attempt to lower the value of the greenback to gain an advantage in global trade.
"We will never embrace a strategy of trying to weaken our currency to try to gain economic advantage," Geithner said, going further than his usual comment that a strong dollar is in America's interest.
The devaluation of the U.S. dollar will wreak havoc on the dollar-denominated savings of ordinary Americans. Of course this government wants to deflect concerns that their actions, whether intentional or not, will result in lower valuations for the greenback.
Unfortunately, the actual markets do not reflect positively Mr. Geithner's reassurance (see accompanying Dollar Index chart). Neither does the commentary of analysts such as those of the Weiss Market Research team. Take, for instance, this recent observation by Claus Vogt:
When the currency of great nations and unions sinks steadily in value ? as we are seeing now with the once-mighty U.S. dollar and even the once-proud euro ? one must step back from the day-to-day fray of financial markets and look at current events from a much broader, historical perspective.
What we see is a history littered with examples of horrendous crimes. But the biggest, the worst, and the most devastating have, almost without exception, been perpetrated in the name of the state.
The separation of powers is one such protective mechanism. But equally important is strict adherence to a currency that cannot be multiplied at will.
Equally poignant is Mike Larson's article declaring officers of the Federal Reserve are the founding members of the "Ostrich Club:"
Federal Reserve Chairman Ben Bernanke. Fed Vice Chair Janet Yellen. New York Fed President Bill Dudley. Rather than use their official titles, I think I'll just call them the founding members of the "Ostrich Club!"
Why? Because they're shoving their heads in the sand and hoping obvious problems will go away, rather than doing anything about them! Specifically, they're ignoring both anecdotal and empirical evidence that inflation is raging.
Any reader of my post can decide that high-ranking government officials know better than anyone else what their policies will yield. That's fine; believe that if you want. But before you make that your final answer, consider this truth...
During the opening stages of the real estate meltdown, while government officials at the Treasury, the Fed, Congress, and the White House were all assuring Americans that this was only a small, isolated economic setback, Mr. Larson, Mr. Vogt, Dr. Martin Weiss, and other members of the team were warning Americans about the risk and dangers they faced (as were many other market analysts). They guided subscribers through the devastating financial landmines so that they landed with intact instead of wrecked portfolios.
Who you choose to believe is your call, but I think that the wise reader would want to consider the track records of all the players.