Forget Tim Geithner's tax returns. I'm interested in his policy on the dollar. Dean Baker notes that the nominee for Secretary of the Treasury articulated two opposite positions during his Senate testimony this week. Asked if he supported a "strong dollar" policy, Geithner said that he did. A strong dollar -- a dollar that can be traded for a larger amount of foreign currency -- "is in the national interest," he said. But then he complained that China was "manipulating" its currency by keeping its value low against the dollar, which is to say, by keeping it so the dollar trades for a larger amount of currency. As Dean writes, "the complaint against China implies that Geithner wants a lower-valued dollar which is directly opposite to wanting a strong dollar." So which is it? And if it's some sweet spot between the current and hypothetical exchange rate with China, where is that sweet spot?
