Ezra Klein highlights actions by three separate executive officials involved in implementing economic policy. or providing advise about it:
The Secretary of the Treasury: Tim Geithner urged the IMF to push China on its currency, reports Howard Schneider: "In seeking to muster a broader coalition, Geithner issued an ultimatum to the International Monetary Fund: take a more aggressive stand on China's currency or potentially lose U.S. backing for a series of efforts pending at the agency. The IMF is debating changes in how it is governed to give greater influence to developing nations in Asia and elsewhere, but Geithner said these steps should be tied to these countries, in particular China, allowing their currencies to more closely adhere to free-market levels."
The Chair of the Federal Reserve: The Fed may target an interest rate rather than buy a set amount of bonds, reports Neil Irwin: "Instead of just announcing that it will create, say, $500 billion out of thin air and buy bonds with the money, the Fed could instead announce it will target a certain interest rate and then buy Treasury bonds so that rates in the marketplace reach that level. For example, the Fed could announce that it aims for three-year Treasury debt that now carries an interest rate of 0.56 percent to instead be 0.25 percent. It would then buy Treasury notes in whatever amounts were needed to get rates to the target level. That would help the economy by lowering rates for a broad range of borrowers, including Americans looking to take out a mortgage and companies looking to use debt to finance expansion."
The Chair of the Council of Economic Advisers: Austan Goolsbee says we'll need to grow, not tax or cut, our way to fiscal sustainability: "What little countries did to deal with their imbalances are frequently not available for giant economies like the U.S. or Japan. More intense research shows that the primary way countries get out of fiscal holes is by increasing their growth rate. To posit that you have to either substantially cut spending or raise taxes belies the fact that what really matters is debt-to-GDP. In the U.S., we’ve often reduced that ratio without running surpluses by getting the growth rate up."
