SEOUL, SOUTH KOREA — Amidst criticisms that the US is trying to ‘devalue its way back to prosperity,’ President Obama wrote a letter to G-20 leaders arguing that the world needs the American economy to recover –indeed, that the US dollar's strength and global economic health hinge upon it.
“A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery,” President Obama wrote on the eve of the G-20 summit in Seoul, South Korea. “The dollar’s strength ultimately rests on the fundamental strength of the U.S. economy.”
You can read the full text of the letter HERE.
Federal Reserve chairman Ben Bernanke’s plan for “quantitative easing” — translated that essentially means pumping $600 billion into the US economy through the purchase of Treasury securities – has met with criticism from fellow G-20 nations.
At the International Finance Forum in Beijing, deputy governor of the People's Bank of China Ma Delun said this week that the Fed plan "may add risks to the global economic imbalance, put pressure on emerging markets to adjust their international balance of payments and could also stir the formation of asset bubbles, all of which require our vigilance.”
And German Finance Minister Wolfgang Schaeuble in an interview with Der Spiegel called the move “clueless” and said he has “great doubts about whether it makes sense to pump unlimited amounts of money into the markets. There is no shortage of liquidity in the U.S. economy. I can't see the economic argument for this move."
Schaeuble said “it doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar.”
Asked in India if the move by the Fed may look hypocritical to other world leaders, President Obama said “the Federal Reserve is an independent body. It doesn’t take orders from the White House, and it’s important as a policy matter, as an institutional matter, that we don’t comment on particular Fed actions. I will say that the Fed’s mandate, my mandate, is to grow our economy. And that’s not just good for the United States, that’s good for the world as a whole.”