So much for the ‘strong dollar’ policy

November 8, 2007

Realistically, it’s almost impossible to believe that Bush is some kind of Manchurian President, intentionally screwing up and deliberately undermining the United States. In all likelihood, the president is failing because he’s incompetent, not because he hates us.

But sometimes, it’s hard not to wonder. Dan Froomkin, for example, did a nice job today describing Bush’s disastrous dollar policy.

President Bush doesn’t talk about the dollar much, but when he does, he’s got exactly one thing to say about it: “We have a strong dollar policy.”

It’s becoming increasingly clear, however, that Bush’s “strong dollar policy” is driving the greenback into the ground.

The dollar is hitting record lows this week amidst fears that the mortgage-market meltdown will spread to other parts of the economy and as the Chinese make noise about moving more of their investments into euros. But it is the underlying dynamics of the American economy — continued massive trade deficits and a whopping national debt — that have put the dollar in such a precarious position.

A true strong dollar policy, aimed at increasing the confidence of international investors, would require Bush to do a bunch of things he doesn’t want to do. For instance, he would have to stop borrowing so much money to fund his tax cuts and his wars. He would need to encourage the Federal Reserve to raise interest rates, rather than depend on it to keep propping up the domestic economy by decreasing them. That sort of thing.

Instead, Bush just offers the strong-dollar line, without specifics, and moves on.

If Bush were a Manchurian President he’d, well, probably do exactly this, right after launching a disastrous war that helped our enemies, pushing tax cuts the country can’t afford, squandering our moral standing around the world, and undermining our rule of law.

Underscoring Froomkin’s point, consider this exchange between Bush and the Wall Street Journal’s editorial board last month.

WSJ: “[T]here has been a lot of concern, obviously, about the value of the dollar around the world, and some calls for the U.S. to put more action behind its vow that we support a strong dollar. How do you respond to them, and do you think Treasury needs to intervene at all at this point?”

Bush: “Secretary Paulson, of course, is our main spokesman on this issue, and he reflects the view of this administration that the strong dollar policy is the correct policy. And we also believe that the best way for a currency to become valued is through the market.”

WSJ: “That’s it?”

Bush: “Yes.”

WSJ: “Is the low dollar helping the trade deficit numbers that today were pretty good?”

Bush: “The policy of the U.S. government, when it comes to the dollar, is a strong dollar policy, and that the currency — the value of the currency needs to be set by the market.”

WSJ: “Okay.”

Raise your hand if you think Bush even knows what a “strong dollar policy” even is.

I theorized a long time ago that Bush is the “Iranian Candidate,” since he seems to do more all the time to secure the zealots and extremists a hold on Iran and suppress the wishes for reform by young Iranians.

  • Russia and Saudi Arabia are considering pricing oil by the Euro instead of the Dollar. Iran has already done so (which is probably the real reason why they are enemy number one right now).

    When the US has to purchase Euros to buy oil and the price of gas doubles or triples (and by proxy everything else), what will be left of Bush’s strong Dollar policy and the US economy?

  • I can’t help thinking that the US would be better off with a retarded chimpanzee in charge.

  • Raise your hand if you know what fiat money is and how it is manipulated by private, secretive banksters that are enriching themselves and their corporate friends.

  • Translated:

    Bush: “Secretary Paulson, of course, is our main spokesman on this issue because I don’t have the first clue what we are talking about.

  • Perhaps “Strong Dollar Policy” is one of those Bush terms that really means the exact opposite of what it seems to, see also “Clear Skies Initiative”, “No Child Left Behind”, “Compassionate Conservative” etc.

  • ***Zeitgeist ***has ir exactly right . Bush doesn’t have a clue as to what he’s talking about but yet he opens his mouth and says what he’s been told to say. It’s a strong dollar policy as long as Bush keeps applying tape to hold it together till he can get out of office and it can be blamed on the Dems.

    Our economy is like the New Year’s Eve Times square ball that is dropping in relation to the number of days Bush has left in office before the crash. He’s done us in with the war debt and tax cuts for the rich financially plus by doing nothing about global warming…the environment is to the point of no return.
    Is there anything this administration and the elected republicans have not broken? Look what Pelosi and dem centrists like Conyers and others have allowed republicans to do to our country. They are just too busy to stop them. The mind reels.

  • Maybe Bush is referring to the Canadian dollar?

    Maybe the Carlysle Group has some hefty investments in assets/companies measured in denominations other than the dollar?

  • Maybe Rove is, in fact, an evil genius. If one wanted a Permanent Republican Majority, why not use your 8 years to (a) totally polarize the politically active members of society into “us” and “them”; (b) stoke the passionate fires of the “us” crowd with things that appeal to the primordial ooze in their brains like wholly debased views on torture and civil rights; (c) totally demoralize the “thems” by breaking every known convention about civil politics leaving their leaders looking like deer in headlights; (d) knowing that your approach would be controversial and have to come to an end, leave so many policy and economic time bombs ticking that the following “Them” administration would inevitably be a failure as they try to clean up more messes than all of the DC Comics Superheroes together could clean up, leaving any remaining Them’s discredited and everyone but hardcore “Us” members totally turned off of politics and governance, and as submissive as a whipped puppy. Sure you’d spend one term out of office, but the reward would be a long-time Us majority.

    This may give Rove et al too much credit for competence, but likely does not overstate their evil.

  • “(d) knowing that your approach would be controversial and have to come to an end, leave so many policy and economic time bombs ticking…”

    At least it would be OK to torture all of them, Rove included, then…

  • I was hoping at the end the WSJ reporter would say, “Okay…you have no idea what you’re talking about, right?”
    Bush: “Right. Now watch this drive!”

  • It’s scary enough that we got a president this dumb, but that he’s been on the job for this long and is still this dumb…simply amazing. It was obvious that the WSJ guy was equally amazed at Bush’s dumb response.

  • piebald, @14,

    I expect that Bush’s last — and unreported — line was “I want some ice cream now”. Having delivered his line — twice — I’m sure he felt he deserved it.

    BTW. Has anyone seen “Other People’s Lives” (Germany, 2006)? According to Stasi training, he same answer given in the same exact words was indicative of an answer memorized and therefore untrue. It called for further grilling (sleep deprivation, stress positions. No waterboarding, though), until the true answer emerged. What were the WSJ interviewers thinking of, to let him off like that?

  • The world appears to be losing faith in the US dollar and in the strength our economy. Not good news. Going from the petrodollar to the petroeuro will give US consumers a shock at the pumps. Inflation should increase as the copious imports we consume will increase in price while our wages will not, a bad fallout from the loss of our own internal ability to produce and the outsourcing of so much of the manufacturing of goods that we consume. I would also expect an increase in foreign purchases of US property as foreign nations holding increasingly worthless notes will want to sink their dollar holding into something of more tangible value (Hello Dubia Ports World!)

    Since our purchasing habits have been propped up by foreign purchases of our debt so we could continue living extravagantly, I expect a tightening of this policy and a corresponding tightening of credit domestically. Not good news to the housing sector which is already in a world of hurt.

    The only way the administration could want this policy is if they are trying to stem illegal immigration by strengthening the peso in relation to the dollar.

  • The one part that is being overlooked here is why the world is swimming in dollars (causing the value of the dollar to drop against other currencies). Sure our debt and trade deficits are part of it, but the main factor is that the wars in Iraq and Afghanistan need to be funded and since tax revenues are down due to tax cuts, there is no choice but to print more money. How come there has been no reports in the media about money supply and the effects of the war on the supply of dollars??

  • “The world appears to be losing faith in the US dollar and in the strength our economy. Not good news.”

    It also could be losing faith in the US as well, as a solid, stable and, for all intents and purposes, trustworthy country overall, not just economically. Especially with all that has gone on these past 7 years and the prospect that such glaringly incompetent ignorance will continue under a Giuliani/Romney/McCain/Huckabee administration.

  • Why do the media, press and pundits, and Democratic and Republican leaders, for that matter, continue with the charade that this man is president? He is an imbecile, a lazy, uninformed spoiled ass, incompetent beyond words and quite possibly a sociopath. Why don’t they call this fraud out for what he is for the good of the country? I just don’t understand it. Then you watch Chris Matthews drool over a Bush speech, that he didn’t write and didn’t ask for and probably doesn’t even understand, and you say to yourself: My God! Don’t these people even know that Bush is a hollow man, an empty suit, a complete phony?

  • Driving down a country road on a hot summer’s day with the windows rolled down, I will eventually drive by a bit of roadkill that’s been, shall we say, “well-ripened by the sun.” I suppose I could jest about the stench of decay emanating from beyond my open window by saying that this particular bit of roadkill is exhibiting a “strong roadkill policy.”

    Ironically, this Bushist “strong dollar policy” smells just about as bed as that roadkill would….

  • Zeitgeist

    LOL! Gotta’ agree w/you. Bush is clueless about “the dollar”, and his empty mind on the subject shows. When he’s clueless he always says something like, “Whatever so-and-so said,” or “Whatever’s in the bill. Don’t bother me about details; I’m too important.”

  • That’s the whole problem with conspiracy theories in general these days. It’s just gotten damned near impossible find anyone in any position of power who seems bright enough to make a credible conspirator.

  • I almost wish the rest of the world would sell Treasuries and convert to the Euro. It would be the equivalent of the A-bombing of Nagasaki to the American Imperium. I’d even be willing to take the economic disaster if it did wreck corporate America. There wouldn’t be a Republican politician not hanging from a lamp post in a week.

  • Remember the ‘axis of evil’? I don’t think that it had anything to do with terrorism…N. Korea had started buying its oil in Euros; Iraq was starting to use euros in the oil for food deal; and Iran has been trying to set up an oil burse for some time…denominated in euros.

    The Great American Economy of the later 20th century rested on two things: the military-industrial complex and petrodollars. Both made our consumer economy possible and successful. Our trade deficit with oil producers is lower than with non producers, because we export a great deal of expensive military hardware to the oil producers. what was the military-industrial complex is no just the military complex, industry has been moved off shore; consequently, the consumer economy that worked because person A worked at an auto factory and used his income to buy a washing machine built by person B, who then used his income to buy a new car has been severed. Petrodollars worked because the dollar became the defacto reserve currency…why wouldn’t it be? But when your answer to every market downturn is printing more dollars and more dollars and more dollars, the law of supply and demand will eventually catch up to you. We’re learning the hard way.

    The only good news is that a dollar bottomed out will decrease the debt burden on younger Americans over the long term. And they need it, since their inheritance was not only spent, it was borrowed against and leveraged to the hilt.

    Mr. Bush is not clueless, his ‘strong’ dollar policy is very beneficial to his friends. The high market numbers and the equally high oil prices reflect and are the effects of his ‘strong’ dollar policy. that the policy hurts nearly everyone in the owrld and his own people most of all is of no concern to him.

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