Sound, Stable, Money

As my blogger friend Webutante has pointed out, it was the weak, unstable dollar that was a major factor producing our present financial difficulties. Worried about our trade deficit with China, our past Treasury Secretaries Snow and Paulson, along with Fed Chairmen Greenspan and Bernanke, allowed the dollar to weaken.

Bret Swanson writes in yesterday's Wall Street Journal that our new Treasury Secretary, Timothy Geithner, is continuing America's misunderstanding of China. In his Senate testimony he accused China of "manipulating" its currency to cause an imbalance of trade. Quoting Nobel laureate, China expert, Robert Mundell, Swanson writes that America should be focused on the stability of our own currency, rather than being so obsessed with the trade deficit.

Swanson is actually hopeful, though, that with Obama's appointment of "sound money advocate" Paul Volcker to his economic team, and with Mr. Mundel "plugged in to China," that we may yet see a revival of sound money in 2009 and beyond.