Thursday, April 02, 2009

Bachmann-Turnip Overdrive: Clueless 'global currency' paranoia in high gear

-- by Dave

It seems to be slowly sinking through the addled pates of Michelle Bachmann and her avid codependents, like Glenn Beck (henceforth dubbed "the Turnip"), that all this talk about "replacing the dollar with a global currency" has nothing to do with what America wants to do.

But that doesn't mean they're going to abandon their glorious quest to protect Americans from having to buy their groceries with BigBrotherBucks or NewWorldOrderNotes or some such "one world government" currency imposed on us by nefarious "internationalists" in the Obama administration. Ohhh, no.

Bachmann went on Beck's show yesterday to natter at length about Bachmann's bill to block the U.S. from ever joining any such plan. And instead of suggesting, as they have previously, that we all might be forced to start using some new global currency in lieu of the dollar, they fudged the thrust of their conversation a bit without abandoning the conspiracism at all:

Beck: OK, here's the one thing that comes to mind, Michelle. And that is: We can pass anything that says we're not going to recognize any currency -- but that won't keep the value of the currency. The only thing that will keep the currency -- uh -- value -- the only reason why we would look to another currency is because ours sucks because we've devalued it by spending and borrowing and printing. So this legislation really in the end means nothing if we don't stop the spending.

Bachmann: The spending is the key to everything. But it seems like right now there are so many leaks in the dam from every different area. We're fighting out-of-control spending on one hand, out-of-control taxation on another. And now we're talking about the International Monetary Fund being expanded to take on a new, expanded set of responsibilities it was never designed to take on, and that would be expanding the Special Drawing Down Rights for every country, and taking the dollar off as the medium of exchange. That in itself would devalue our dollar lower than we ever seen before in the history of our country. I don't want to see that happen.

There are some glimmers of understanding there, but it's clear that Bachmann is again transmitting to us from Planet Wingnuttia, since this has little to do with the text of her bill.

Beck is shocked, shocked that only 30 congresscritters have signed onto Bachmann's bill. But that might be because they've read its actual text:

`The President may not enter into a treaty or other international agreement that would provide for the United States to adopt as legal tender in the United States a currency issued by an entity other than the United States.'.

Nevermind that this is a Constitutional amendment (which requires subsequent passage by the legislatures of all 50 states). What's clear is that this is a bill intended to prevent a "global currency" being forced upon Americans.

The problem, of course, is that no one is even remotely suggesting such a thing.

Note that Beck describes the bill as "prohibiting the United States from recognizing any other currency besides the greenback," which it manifestly does not do; after all, that would mean we'd refuse to recognize pesos or Canadian dollars or Euros or yuan as well, which would mean the end of foreign trade.

But incoherency is what this whole argument is about. It's about preying on people's gross misunderstanding of international finance and how reserve currency works. Bachmann seems to think America can somehow control what the world uses as its medium of international trade, and seems to now be fearful that international trade will no longer be pegged to the dollar.

But that particular horse has been long gone from that particular barn. The Bretton Woods system, which in fact pegged international trade to the dollar, expired in 1971 thanks to policy changes made by the Republican administration of Richard Nixon. Since then, the dollar has remained the de facto "reserve currency" of choice -- mainly because the United States has remained the world's preeminent economy.

Now, thanks to conservative mismanagement of the past decade and more, that position is in serious jeopardy -- which is why the international community is looking to create a more stable form of reserve currency in which they can invest. It doesn't mean dollars will cease being bought by other nations -- if our economy rebounds to its former strength, the dollar will remain a favorite form of reserve currency --

But reading the text of her legislation, it's clear that the dollar's trade value is not what this bill was about. As Greg Sargent reported:

“She’s talking about the United States,” Keller said. “This legislation would ensure that the U.S. dollar remain the currency of the United States.” Of course, no one had been discussing any change in U.S. currency in the first place….

Indeed, Bachmann's continuing suggestion that Tim Geithner lied to her is manifest evidence of her utter incomprehension -- her complete, bass-ackwards, afactual idiocy:

“Yesterday, during a Financial Services Committee hearing, I asked Secretary Geithner if he would denounce efforts to move towards a global currency and he answered unequivocally that he would," said Bachmann. "And President Obama gave the nation the same assurances. But just a day later, Secretary Geithner has left the option on the table. I want to know which it is. The American people deserve to know."

Asked today about a currency proposal from China at a Council on Foreign Relations event, Secretary Geithner stated he was open to supporting it. Despite attempts to clarify his remarks later in the day, the unguarded initial response calls into question his true intentions.

Although Title 31, Sec. 5103 USC prohibits foreign currency from being recognized in the U.S., the President has the power to engage foreign governments in treaties, and the President is principally responsible for the interpretations and implementation of those treaties according to the Constitution. As a result, legislation prohibiting the President and Treasury from issuing or agreeing that the U.S. will adopt an international currency would need to come in the form of a Constitutional Amendment differentiating a treaty used to implement an international currency in the U.S. from other types of treaty agreements.

Once again, here's what Geithner actually said:

"I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue," Geithner said, saying that however his interpretation of the proposal was to increase the use of International Monetary Fund's special drawing rights -- shares in the body held by its members -- not creating a new currency in the literal sense.

"We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union," he said.

"The only thing concrete I saw was expanding the use of the [special drawing rights]," Geithner said. "Anything he’s thinking about deserves some consideration."

The continued use of the dollar as a reserve currency, he added, "depends..on how effective we are in the United getting our fiscal system back to the point where people judge it as sustainable over time."

Memo to Michelle Bachmann: Special drawing rights are not a new currency. We won't be buying our groceries with them.

[Cross-posted at Crooks and Liars.]

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