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EU Observer: US says eurozone has enough money to save itself
US treasury secretary Timothy Geithner said Wednesday the eurozone has enough resources to save itself: "The leaders of Europe have decided they're going to do whatever it takes to make this work. And they can do it, I think they have the resources and the ability to do it."
Geithner to EU: no IMF money for you, bitches.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Apr 5th, 2012 at 04:22:18 AM EST
[ Parent ]
It is specifically his response for Christine LeGrand'e call for more US funds to the IMF to help with Europe, made in Washington recently on the 50th anniversary of the announcement of The Marshall Plan. Perhaps he should send the BuBa a framed quote of Bernanke's "we have this technology known as the printing press" statement. Having it set in solid gold letters on black adamantine would be an appropriate touch. Every dog shall have his day.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 5th, 2012 at 10:24:12 AM EST
[ Parent ]
what about Special Drawing Rights (SDR's)? aren't they a kind of currency? any limit on printing those?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Thu Apr 5th, 2012 at 12:40:33 PM EST
[ Parent ]
SDRs from wiki:
Not a currency, SDRs instead represent a claim to currency held by IMF member countries for which they may be exchanged.[1] As they can only be exchanged for euros, Japanese yen, pounds sterling, or US dollars,[imf 1] SDRs may actually represent a potential claim on IMF member countries' nongold foreign exchange reserve assets, which are usually held in those currencies. While they may appear to have a far more important part to play, or, perhaps, an important future role, being the unit of account for the IMF has long been the main function of the SDR.

IMF use of SDRs must take account of consensus views, especially those of the USA, Japan, Germany, (for the EMU), and the UK. While in theory fiat money systems could be used to rather easily resolve current financial problems in practice we act more like we were still on a gold standard. It is rather like having a supercomputer but insisting that it only be used in emulation mode -- emulating an Apple II. In addition there would need to be a reasonable consensus on the appropriate way to use fiat money systems in order for such use to be possible. The current use is for the benefit of economic incumbents at the expense of all others. That, and economic theory that defines out of possibility all reasonable solutions,  is the crux of the problem.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 5th, 2012 at 01:00:27 PM EST
[ Parent ]
LOL
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. (November 21, 2002) Deflation: Making Sure "It" Doesn't Happen Here.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Apr 5th, 2012 at 01:49:35 PM EST
[ Parent ]
I suspect Bernanke was sent to a re-education camp after becoming Fed Chairman. There he learned Will Rogers' maxim: "Truth is a precious thing. That is why it is used so sparingly."

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 5th, 2012 at 08:23:51 PM EST
[ Parent ]

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