The NYT reported on efforts to reform the international financial system. It noted the need to correct major global imbalances. In this context, it told readers: "For the United States, that would mean increasing investment and savings while slowing the growth of consumption." Actually, the most important change for the United States would be a reduction in the value of the dollar, which would allow the country to reduce its trade deficit. As long as the United States has an over-valued dollar, it will run large trade deficits when its economy is near full employment. This trade deficit implies that it will either have very high budget deficits or very low public saving.
--Dean Baker
