Geithner Open to Global Currency

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U.S. Treasury Secretary Geithner said he is open to China's global currency proposal but believes the dollar should remain central.

Historically, the dollar has been strong because the U.S. has been an economic superpower.

The U.S. is printing hundreds of billions of extra dollars to get out of this recession which worries countries like China that have invested heavily in the dollar.

Dan Mitchell of the Cato Institute told CBN News why a weak dollar can cause big trouble.

"Well, I think the Chinese plan to create an international currency out of nothing is a bit fanciful. I don't think that's realistic. But I do think the mere fact that they're talking about it is in effect a referendum on the weakness of the American dollar," he said.

Mitchell said the U.S. creates money too easily.

"Why is the American dollar weak? Because we've had easy money policy. In effect, we are stumbling our way back to the inflationary policies of the 1960s and 1970s. I thought we had learned the lesson that you don't try to create prosperity by printing money. And yet that's what happened under Bush, and now Obama's doing it even more," he added.

A weaker dollar will also drive up the cost of most foreign goods that Americans love to buy.

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