How to Destroy the Dollar Without Really Trying

Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal by the governor of the China's central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and "evolutionary."

"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.

At last night's presser, Obama was asked about the Chinese proposal (maybe Geithner didn't watch?) and took the rather old fashioned view that the dollar should continue to serve as the world's currency because the United States is "the strongest economy in the world, with the most stable political system in the world." Sensing a potential firestorm, Smith reports that the moderator at Geithner's event went back to the Treasury Secretary to give him a second chance at answering the question. Geithner then gave the more conventional response that the U.S. government "will do what's necessary to say we're sustaining confidence in our financial markets."