Timothy Geithner

[Tilted]

Don't worry folks, our Treasury Secretary understands the problems with big deficits. He understands the need for fiscal responsibility. He understands the importance of protecting the value of the dollar against inflation. Seriously, he gets it. Just ask him.

On another note, his manner of speaking is becoming all too familiar, and rather funny to observe sometimes. He always starts stammering when he is asked a pointed question that he has no reasonable answer for - and it is usually quite obvious.

My Interview With Treasury Secretary Tim Geithner - Maria Bartiromo

BARTIROMO: How worried are you about the deficits? Most people have learned a hard lesson over the last year or two: We can't borrow our way forever. It comes back to haunt you.

Sec. GEITHNER: It's a nit--it's a necessary lesson. And I think you're right, people understand it. Look at what's already happened to behavior. People are saving more. We're borrowing much, much less from the rest of the world, dramatically less than we were before. And that's a necessary, healthy adjustment. And I think Americans understand that we have to go back to living within our means in the country. The government's going to need to do that just like people are. And so when we have an economy that's growing again and we get unemployment down, we're going to have to bring those deficits down. And we need to make sure people understand that we will do that. Because if they're not confident in that, then recovery'll be weaker, interest rates'll be higher, investment will be constrained, and you'll have a weaker economy with higher unemployment. So it's a really important thing people are confident that we're going to have the will as a country to do that.

BARTIROMO: So these are all the implications of deficits?

Sec. GEITHNER: Yeah, that's why deficits matter. That's why deficits, in the end, can be very damaging to growth. That's why you cannot live with future deficits as large as ours are likely to be. But the necessary path for addressing that problem starts with an economy that is growing, led by private demand.

BARTIROMO: When do you expect growth in jobs?

Sec. GEITHNER: Now, I'm not an economist and don't forecast, but I think if you look at what business economists say now, you're going to see the economy growing at a significant rate second half of this year, the rest of this year. Positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate. What you'll see first is businesses creating jobs on net. That'll gradually strengthen, and then you'll see unemployment start to come down.

BARTIROMO: Sometime in 2010? World Bank president Robert Zoellick recently said that the US should not take for granted the dollar's preeminence and, as you know, China and Russia have both called for a global super currency. Would you expect, at some point, the dollar not be the world reserve currency?

Sec. GEITHNER: I wouldn't. But I think it's right--and I say this all the time--that the dollar's role in the system and for special obligations and responsibility and us as a country, and it is very important that--to understand that we need to do everything possible to sustain confidence in our ability to keep the inflation, low and stable it--over time and to make sure we're getting our fiscal house in order. That's a really important thing to confidence, generally. We take that very seriously, nobody more than me.

BARTIROMO: So what have you done specifically to safeguard the dollar's decline?

Sec. GEITHNER: Well, I think, Maria, if you look generally, you know, I don't--I don't talk about developments in the exchange markets, but--I generally don't do that, but I think if you look at what's happened over the last year, you've seen really a lot of confidence in the US finance, a lot of confidence in the US economy. When the crisis was at its peak, when people were most concerned about the risk of collapse and deflation, what happened then? The world wanted to be in Treasuries, in the safest, most liquid markets, and you saw the dollar rise when people were most concerned about the future of the world. And that is a very important thing. It's not something we can count on, so we need to make sure that we understand and we--and we continue to foster, and again, we're going to do that.