President Obama faces international criticism over disputed currency policy as the G-20 Summit kicks off in Seoul. World leaders question whether the U.S. Federal Reserve is making sound economic decisions for the global economy. Judy Woodruff has details.
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As the president meets today with global leaders in South Korea, we examine currency and trade and the disputes they cause.Judy Woodruff has the story.
Global leaders mustered in Seoul today for what could be a downright contentious meeting of the Group of 20, the world's leading economies — potentially the chief irritant: the U.S. Federal Reserve's plan to pump $600 billion into the American economy over six months by purchasing U.S. Treasury bonds.
It's designed to drive interest rates down and spur expansion and hiring.It could also lower the value of the dollar, making American exports cheaper.
On Monday, in New Delhi, India, President Obama publicly defended the policy.
U.S. PRESIDENT BARACK OBAMA:
The worst thing that could happen to the world economy, not ours — not just ours, but the entire world's economy — is if we end up being stuck with no growth or very limited growth.And I think that's the Fed's concern, and that's my concern as well.
But Eurozone nations, plus China, Russia, and emerging economies, accuse the U.S. of currency manipulation, a charge Washington has long leveled against China.
Other critiques focus on possible inflation.But, with that rate now below 2 percent, Fed Chairman Ben Bernanke has insisted, the real danger is deflation, or falling prices and wages.
There's also friction over trade.New figures today show that, for the first nine months of 2010, the U.S. trade deficit was 40 percent higher than last year.Treasury Secretary Tim Geithner has proposed linking trade deficits or surpluses to a nation's overall economic output.
That's angered Germany and China, which enjoy massive trade surpluses with the U.S.