Minneapolis / St. Paul Blog

Bachmann announced the bill with the following statement on her site:

In response to suggestions by China, Russia, and other countries around the world calling on the International Monetary Fund to explore a multi-national currency, U.S. Representative Michele Bachmann (MN-6) has introduced a resolution that would bar the dollar from being replaced by any foreign currency.

"Yesterday, during a Financial Services Committee hearing, I asked Secretary Geithner if he would denounce efforts to move towards a global currency and he answered unequivocally that he would," said Bachmann. "And President Obama gave the nation the same assurances. But just a day later, Secretary Geithner has left the option on the table. I want to know which it is. The American people deserve to know."

The concern spurred from a story out of China as dollar cash reserves are looking shaky. The reserves are the main point, not a literal international currency you'd be carrying in your pocket and using at the grocery store.

From the Associated Press:

To better insulate countries from the ills of one country or one currency, Zhou said the IMF should create a "reserve currency" based on shares in the body held by its 185 member nations, known as special drawing rights, or SDRs. He said it also should be used for trade, pricing commodities and accounting, not just government finance.

President Barack Obama described China's proposal as unnecessary during a prime-time news conference Tuesday.

"I don't believe that there's a need for a global currency," Obama said.

Bachmann questioned U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke earlier that day during the congressional hearing, asking them if they would "categorically renounce the United States moving away from the dollar and going to a global currency." Both said yes.

Later, Geithner talked more about the issue, says Politico.

"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.

In other words, this is not something that we have much control over. If the dollar declines, why would any country want to use it for their reserves?

This story is going viral, much like every other Bachmann story.

From Think Progress:

What the Chinese were proposing, of course, was to replace the dollar as the world's reserve currency. I would take the view that a move away from near-exclusive reliance on the dollar is probably inevitable irrespective of what we do. But whether or not you agree with me about that, this isn't something congress can ban--it's a decision by foreign countries about what they do with their reserves.

Plum Line reminds Bachmann no one is suggesting the dollar go away:

The thing is, though, is that Geithner has already clarified that he doesn't foresee a change in the dollar's centrality. And Obama himself flatly declared that he's not open to such a change at his presser the other night.

It appears Bachmann may have thought that Geithner was talking about being open to a change in U.S. currency, rather than the world's reserve currency, which is what the China proposal was about. And as Matthew Yglesias notes, foreign countries partake in decisions about the world reserve currency.

I checked in with Bachmann's spokesperson, Debbee Keller, who reassures that this is only about American currency.

"She's talking about the United States," Keller said. "This legislation would ensure that the U.S. dollar remain the currency of the United States." Of course, no one had been discussing any change in U.S. currency in the first place....

Hide your dollar bills! They might be a collector's item before you know it.