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ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

Geithner does not see global inflation as a concern

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by Tyler Durden
Originally posted Jan 28, 2011

Further confirming that America deserves each of its elected officials, in this case a Treasury Secretary whose intellect is increasingly put into question with every single utterance out of his mouth, was Tim Geithner’s statement from Davos earlier that inflation on a global level is “not high on the list of concerns” although probably while looking at pictures of tear gas being fired at protesters in Tunisia, Algeria, Yemen, Morocco and now Egypt he added “emerging markets across the world are certainly ‘feeling some pressure’.”

IF BY PRESSURE, HE MEANS REVOLUTIONS, THEN HE IS CERTAINLY SPOT-ON. As for Egypt’s soon to be deposed leaders, Timmy has four words of advice: please kill the dollar. “Geithner told the World Economic Forum that emerging markets could manage their inflation problems better if they loosened their currencies’ links to the dollar, a measure that economists say would lead in most cases to an appreciation against the greenback.”

And there you have it: America continues keeping the world hostage courtesy of the dollar’s reserve status, able to export inflation at will knowing that the US consumer is irreplaceable, and the only recommendation we have to the world is to continue devaluing the dollar (yes, a weaker dollar means stronger opposing non-dilutable currencies), an act for which we are sure the US middle class thanks him.

 

More on the inane banality emanating from the vocal orifice of the tax cheat:

As for the U.S.’s own fiscal problems, Geithner admitted that the current position is “unsustainable in the long run” and needs to lay out a credible, multi-year path to sustainability. He bemoaned the fact that the U.S. political system lacks any mechanism to enforce this.

Geithner expressed confidence that the recovery has taken root in the U.S., pointing to clear increases in private investment and job creation over the last 12 months. Without explicitly endorsing them, he referenced consensus forecasts of between 3.5% and 4% annualized growth for the U.S. for the near term, and a “tighter consensus” that the jobless rate will fall to below 8% by the end of next year, from around 9.6% at present. He noted, though that the U.S. was “consigned to a tragically moderate” recovery and an accordingly slow decline in joblessness. Speaking Thursday, HSBC Holdings PLC chief economist Stephen King had noted that although an annualized growth rate of 3.5%-4% appears healthy enough, it’s below the 5%-7% that the U.S. has seen at a comparable stages of previous recoveries.

Geithner acknowledged the need not to jeopardize the recovery by cutting spending too fast, but warned that there is “no alternative” in the long term to tackling the liabilities that the U.S. faces from its social and healthcare spending. He took comfort from that fact that, although the U.S.’s overall public debt has risen sharply as a result of the crisis and of years of deficits before 2008, the U.S. remains better positioned than many other large economies to deal with the problem, owing to its demographics.

“We’re a younger country… we have a more open economy,” than many others, Geithner said. By contrast, he argued, Japan, a country with well-documented twin problems of high debt and an ageing, shrinking population has a formidable challenge in generating the growth it will need to reduce its debt.

Lastly, Geithner confirmed the administration’s view that US form of central planning is so much better than that in China and Russia. He also dismissed the suggestion that state capitalism, as embodied by countries such as China and Russia, could establish itself as a credible long-term alternative to the U.S. model of smaller government and free trade.

“No risk of that,” Geither said. We would add that there is no risk of a centrally planned economy not following the same fate as the USSR. But that is so obvious it will be recognized by the rating agencies just a few minutes after the end.

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