It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to be competitive. It is not a viable, feasible strategy, and we will not engage in it.
Timothy Geithner
As financial markets continue to broaden and deepen, the behavior of asset prices will play an important role in the formulation of monetary policy going forward, perhaps a more important role than in the past.
past play forward behavior important
The substantial uncertainty about the path of asset price movements going forward necessarily reduces the case for altering policy in advance of the move.
uncertainty forward price path
When policy-makers have already witnessed a significant move in asset values, and are confident in what that move means for the outlook, it should be prepared to adjust policy accordingly. The central bank must be responding to its assessment of what an already observed movement in asset prices will mean for output and inflation.
values movement outlook confident inflation
Monetary policy itself cannot sensibly be directed at reducing imbalances.
The plausible outcomes range from the gradual and benign to the more precipitous and damaging.
And if all else were equal.. Monetary policy in the affected countries would have to adjust in response: policy would have to act to offset these effects in order to achieve the same impact on the future path of demand and inflation.
order future achieve act impact path demand inflation
To do otherwise would run the risk that monetary policy would be too accommodative, pulling resources from the future in a way that would alter the trajectory for the growth of the capital stock, perhaps amplifying the imbalances, and compromising the price stability.
growth future risk stability run price
But what we're determined to do, and what the reforms will do is to make sure this system goes back to its core purpose of taking the savings of Americans and from investors around the world and allocating those to people with an idea, not just the largest companies in the country, but to small businesses with an idea and a plan for growing.
plans purpose people system
I personally believe that there's going to be a good case for the government preserving some type of guarantee to make sure that people have the ability to borrow to finance a house even in a very damaging recession. I think there's going to be a good case for that.
finance ability people government
strategy prosperity people
There is a basic lesson on financial crises that governments tend to wait too long, underestimate the risks, want to do too little. And it ultimately gets away from them, and they end up spending more money, causing much more damage to the economy.
money government theend
Some think that by preparing to deal with crises you make them more likely. I think the wiser judgment is the contrary. In this area at least, if you want peace or stability, it's better to prepare for war or instability.
peace war
The government can help, but we need to make this transition now to a recovery led by private investment, private.
government help
We will not support returning Fannie and Freddie to the role they played before conservatorship, where they fought to take market share from private competitors while enjoying the privilege of government support.
government
Financial crises require governments.
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