Paul O’Neill, a former Treasury Secretary for the U.S. recently suggested that the "strong dollar" policy that the U.S has in place since 1995 is not based on strong principles in fact O’Neill has stated that its "a vacuous notion."
This "strong dollar" policy suggests that the US has the capability of managing the value of the dollar and other currencies in the world. O’Neill was in office during 2001 and 2002 and tried to pursue the idea of a of a strong economy instead of pursuing the idea of a strong currency. Today’s Secretary of the Treasury has often repeated his support of the "strong dollar" policy.
O’Neill says ``When I was Secretary of the Treasury I was not supposed to say anything but `strong dollar, strong dollar.'' But in now he doesn’t believe in such a thing, and he didn’t really believe it back then either. In fact he now says, ``I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion.''
In fact, the dollar recently fell again against the euro by 15% and O’Neill believes that the U.S. government has little to do with whether the dollar is strong or not, and it is really the markets that have more control over the rise and fall of the currency than the U.S. government does. "When people say STRONG DOLLAR, if they don't mean that `we believe intervention can work and we're prepared to intervene,' then `strong dollar' is ridiculous,'' said O’Neill.
The G-7 Reunion
In their April 11th meeting, the Group of Seven major nations’, finance chiefs, gave a serious warning as to the repercussions that could arise from the falling dollar. Soon after these concerns were voiced to the people, the Secretary of Treasury of the U.S. reiterated in a following press release, his "strong dollar" motto, but O’Neill says, he was asked to repeat the mantra as well, and that every Treasury secretary is asked to repeat the phrase, and has done so since the Clinton era, when the Motto was instigated. The Treasury secretary always follows the “strong dollar” policy, no matter what the real state of the dollar is.
The dollar recently reached an all time low of $1.5979 against the euro. It has also dropped by 14% against the Japanese yen in the last year, trading at 101.45 yen.
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