U.S. Treasury Secretary Timothy Geithner said on Thursday that a strong dollar was very important to the United States and the rest of the world needs to be convinced Americans will be more thrifty in future.

A strong dollar is very important to this country, I mean that, and it's very important that people recognize it, he told a news forum at the Newseum in downtown Washington.

Speaking just before departing for Istanbul, Turkey, for a Group of Seven finance ministers' meeting, Geithner said the dollar's exceptional role in the global financial system invests the United States with extra responsibility.

Questions have been raised about whether the world will be willing to keep financing huge American debts forever or whether they might seek an alternate reserve currency.

Geithner made clear, in response to questions, that he was aware of the debate and of the importance of persuading others that the United States was willing to take measures to preserve the currency's value.

It does bring special responsibilities and burdens on the United States and it's very important that we make not just Americans but make the world understand that we are going to go back to living within our means, he said.

Geithner added, And we are going to make sure that our independent Federal Reserve keeps inflation low and stable over time...and we are going to run fiscal policy in this country consistent with that basic objective of going back to living within our means.

The U.S. is headed for a record deficit of around $1.8 trillion this year and, according to the Congressional Budget office, an estimated $1.4 trillion deficit in fiscal 2010.

Geithner said there were signs of global economic recovery, which would produce more revenues, but he stressed they were only tentative signs at this point.

He said the financial crisis the world continues to work through stemmed partly from the fact that central banks kept interest rates too low for too long and created conditions for an asset bubble that eventually burst.

There was a long period where monetary policy around the world was very, very loose and accommodative, Geithner said, adding that allowed risk-taking to become excessive.

You had a huge boom in wealth outside the United States and that money was looking for a home and it created huge demand progressively for what proved to be very risk types of financial assets, Geithner said, adding that government failed the test of preventing the buildup in risk.

(Reporting by Glenn Somerville; Editing by Andre Ricci)

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