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Do Policymakers Want a Weak Dollar?

The value of the dollar against other world currencies is hovering around a 15 month low. And it doesn't matter whether the analysis comes from the left or the right: policymakers really want a weak dollar, despite lip service to the contrary.

From the New York Times:

Treasury Secretary Timothy F. Geithner continues to repeat that a strong dollar is "very important" for the American economy, but United States fiscal and monetary policy pushes toward depreciation. To bail out our banks, we need cheap money, and this implies some inflation. To finance our current account deficit, investors need to think they are buying inexpensive assets from us. Everything points to a cheaper dollar.
And a second from the Economist:
What, apart from talk, will America do to support its currency?

Raise interest rates? Well, that's not up to Geithner but to the Fed, which is talking of an extended period of low rates. Raise taxes and cut spending to slash the deficit? Not going to happen anytime soon. Intervene to boost the dollar? That would involve the Fed in yet more meddling in the market, which might be politically unpopular, especially as Congress thinks the dollar is too strong against the Chinese currency.


Of course, your alternative explanations are welcomed below.
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