The Most Sensitive Subject In Washington

It's not national security. It's not Charlie Rangel. It's ... the currency.

Try as hard as you can, but you're likely to fail unless you get a principal in front of a camera -- and even then -- no one wants to talk about the dollar or its future. That's because no group of citizens of the earth are more twitchy than currency traders -- and how many dominoes can be knocked over by a single twitch is kind of scary. Banks of Central Asia, of China, of Russia, and of Europe can move billions on a sentence from the Treasury Secretary. (Even when Larry Summers was President of Harvard, an errant comment about the yen caused the Japanese currency to decline by four percent overnight. Note: I can't find a citation for this, so I'll just say "wobble.")

The administration's goal: maintain strong dollar rhetoric ... talk up the dollar's long-terms strength behind the scenes ... and tolerate, without intervention, the currency market's own verdict until it becomes politically or economically unsustainable.

Republicans are going to blast the administration for printing too much money, for inevitably driving up inflation, for discrediting the dollar, and for creating a Treasury bubble that's bound to pop, knowing full well that the only thing you'll hear from the administration is "strong dollar, strong dollar, strong dollar."

The brutal reality is that by printing so much money to save the economy and unlock the credit markets (their reasons), the government has already intervened to weaken the dollar. And there is no other place for China to park its extra cash. Maybe there will be in ten years -- but there's not, now -- and so the U.S. is content to let the hyper-efficient currency markets do what they will.

Until interest rates starts to rise, either artificially (to prevent too much inflation) or naturally (which would signify a true drop in the demand for dollar-denominated-assets), there doesn't seem to be any appetite within the administration to change its posture.

Moderate Democrats, worried about how perceptions about long-term debt will effect the dollar over the long-term, will beg the administration to do more to acknowledge the problem. Sen. Evan Bayh, for instance, wants the government to create a debt reduction commission.

How does this translate to the public at large? There are a lot of price-for-gold commercials, because gold is high, and there are plenty of top-level debates about borrowing and debt ... but this is one of those issues that won't become acute until something really bad happens -- if it ever does.