U.S. Treasury Secretary Tim Geithner’s bout with foot-in-mouth disease continues.  Now, apparently, he endorsed efforts to undermine the security of the United States by (inadvertedly, or otherwise) supporting the replacement of the U.S. dollar as the worldwide reserve currency with something new. Like so many of Geithner’s grand ideas, this one too manages to leave investors weary.

However, ending dollarization carries with it consequences far beyond those most obvious. Nothing could make this more readily apparent than Chinese support for a plan to convert the IMF into a sort of worldwide central bank. By having its currency be that by which all others are judged, the United States plays a role as a sort of economic arbiter in the world, virtually ensuring that its own domestic security needs are met.  This allows for one of the most robust, free, and democratic societies on earth influence the progression of peace throughout the world on terms favorable to its values. Fortunately, President Obama is likely to not stand for the dedollarization scheme. Such a possibility should worry the G20 (of which the People’s Republic of China is a part) nations as they gather to meet in the next week.

While some reform is needed in the regulatory apparatus of the United States, and likely in other countries too, what is not needed is a surrendering of global monetary stability to yet another unelected bureaucracy. Do not forget that the IMF was the institution providing Geithner his salary when he wasn’t paying taxes. With men like Tim Geithner in their employ, what could possibly go wrong?

Last 5 posts by James Kane

• A November to Remember - November 8th, 2010
• On hope and fear - October 18th, 2010
• Expecting Different Results - September 12th, 2010
• A glaring omission on Iraq - August 31st, 2010
• Employing a losing strategy - August 7th, 2010