Bachmann Bill: Don't Replace The Dollar
Minnesota Rep. Michele Bachmann has introduced a resolution in the House "that would bar the dollar from being replaced by any foreign currency."
Think Progress' Matthew Yglesias first flagged the legislation, which appears to reflect confusion on Bachmann's part about calls by China for a so-called "international reserve currency."
Here's why: China has indeed called for a new global currency that would, in one sense, replace the dollar. But that does not mean Americans would start using such currency in everyday transactions. The dollar would only be "replaced" in that it would no longer serve as the world's reserve currency.
Because it has a significant investment in U.S. government bonds, China is concerned that its investments will be devalued as a result of inflation tied to U.S. economic struggles and the Obama administration's stimulus and bailout spending.
Along with some other countries, it has called for a global currency controlled by the International Monetary Fund that would be made up of a number of currencies and "achieve the objective of safeguarding global economic and financial stability."
And as Yglesias points out, Congress couldn't legislatively ban such a move even if it wanted to, since this is a "decision by foreign countries about what they do with their reserves."
Despite these facts, Bachmann's press release about the bill is headlined "Bachmann Demands Truth: Will Obama Administration Abandon Dollar for a Multi-National Currency?"
The move landed her at the top of the conservative-leaning and enormously popular Drudge Report web site.
Contacted by Greg Sargent, Bachmann's spokesperson said the representative understands the situation and is "talking about the United States."
"This legislation would ensure that the U.S. dollar remain the currency of the United States," added the spokesperson. As Sargent notes, there has been no suggestion from China or anyone else that the dollar cease to be the currency of the United States.
On Tuesday, Bachmann asked Treasury Secretary Timothy Geithner and Federal Reserve Chair Ben Bernanke to "categorically renounce the United States moving away from the dollar and going to a global currency."
Both men did so, but Geithner later said he was open to an international reserve currency. He later walked back that comment, which Bachmann seized on in her press release. Again, however, the creation of such a currency would not mean the U.S. would "abandon" the dollar.
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