At issue is a U.S.-led proposal to prohibit currency manipulation of the kind that U.S. officials say China uses to give its exports an unfair advantage over American-made products.
Doesn’t it “look hypocritical,” Obama was asked at the news conference, to make that demand after the United States last week announced a $600 billion plan to boost U.S. economic growth that will have the effect of driving down the value of the dollar?
First Obama distanced himself from the decision, saying the Fed “doesn’t take orders from the White House,” then he defended it. But coming only hours after he had conceded on CBS’s “60 Minutes” that he is sometimes at a loss about what to do on the economy, the dispute put a damper on a trip that was supposed to emphasize that Obama’s electoral losses didn’t diminish his stature as the leader of the world’s most powerful economy.
And Germany, for decades a close U.S. ally in persuading other nations to control budget deficits, effectively called U.S. officials hypocrites for neglecting bank regulation and for failing for years to curb runaway trade and budget deficits. The Fed’s decision last week to start buying Treasury bonds to help stimulate the sluggish U.S. economy, something likely to lower the value of the dollar and make it tougher for Germany’s export-oriented economy, brought that criticism out into the open.
Obama, who normally avoids discussing the informal and close coordination between the Fed and the Treasury Department, was forced to spring to the Fed’s defense Monday. “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."