Tim Geithner may have just killed the US Dollar...

[Affiliatesmart]

I'm totally speechless.....

http://www.telegraph.co.uk/finance/e...s-markets.html

"US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is "quite open" to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.

The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.

"The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation," he said.

Mr Geithner later qualified his remarks, insisting that the dollar would remain the "world's dominant reserve currency ... for a long period of time" but the seeds of doubt have been sown. "

[Affiliatesmart]

Sorry here's the link

http://www.telegraph.co.uk/finance/e...s-markets.html

[TheGooner]

The continured use of the US dollar as the denominator of resources is merely a hat-tip to the 50s, 60s and 70s when the US was the dominant economy. It was the obvious choice when the exchanges were first set up.

There is little doubt that the era of the US currency as a world currency is over - it is hardly a store of wealth any more given the fiscal policies of QE and QE2 - and the devaluation of the US dollar is the prime reason for gold, silver, oil having headline high prices.

These prices are only highs in US dollar terms - not when translated to other currencies.

[tryme]

That article is two years old. But I'm with the Gooner on this.

As a UK citizen, it has always seemed strange to me that the US dollar was the world currency, when, by contrast, Sterling has always been more 'valuable' in exchange markets. IE: the UK pound has never been worth less than any other currency when converting from one to another.

I know this isn't the benchmark of the value of a reserve currency but clearly in an era where the US (and the UK for that matter) have huge deficits with large amounts of government debt being held by the Chinese among others, there is a need for change.

[davenewgates]

tryme, you might have a point in that. US economy is not on a stable status now so if we're talking of value here, UK pound is just the most valuable in terms of today's market. This change will bring a major effect for every nation's economy.

[dhayman]

Doesn't it amaze you, that this kid Geitner has been in the position he is in, when he doesn't even know how to pay his own taxes ? Although this comment is old, it is a harsh reality, and the comment may have been made to pay homage to the Chinese, who own a significant portion of the U.S. debt. Remember, if China were to pull the plug on U.S. Treasury holdings, this would cause a precipitous (and probably calamitous) drop in the U.S. dollar. The U.S. has been run by idiots since the year 2000, and I see no signs of things getting any better.