According to the NYT, it seems that this is exactly what he agreed to at the G-20, unless he got a commitment to get the value of the dollar against the Chinese yuan and other currencies. According to the article, President Obama pledged to raise the U.S. private saving rate and reduce the budget deficit. While the saving rate has already risen due to the loss of $6-$8 trillion in housing bubble wealth, if the budget deficit is substantially reduced without a reduction in the value of the dollar, then it will lead to a rise in the unemployment rate.
If the dollar falls, then increased exports and reduce imports can make up for the loss of demand that would be the result of a lower budget deficit. However, if the value of the dollar does not change appreciably, then there will be no source of demand to offset the contractionary impact of a smaller budget deficit.
The NYT should have better explained to readers the extraordinary nature of the commitment that it claims President Obama made at the G-20.
I’m writing to you today with a sense of urgency that I haven’t felt since I began my journalism career. As executive editor of The American Prospect, I’ve witnessed firsthand how independent journalism serves as a crucial bulwark against the erosion of our democratic institutions. Today, that role is more vital than ever. Can you step up today and show your support?
The winds of authoritarianism are blowing stronger. We’re seeing alarming signs of a coordinated effort to silence critical voices and undermine the very foundations that support progressive causes. As Bob Kuttner presciently wrote in our August 2024 issue, a weaponized IRS could attack the very foundations of the progressive movement. We need readers to step up and help us dig in for the long haul.
We’re falling behind in our spring fundraising campaign, and with so much at stake we can’t afford to come up short. If you value fearless, independent journalism that holds the powerful accountable and defends democracy, now is the time to step up. The American Prospect depends on reader support to stay in the fight. Pitch in today and help us close the gap. Please consider making a donation today.
–David Dayen, Executive Editor
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved