ASEAN KEY DESTINATIONS
US economist warns not to focus on currency
By Paul A. Ebeling, Jnr
Currency wars have no winners, and emphasizing currency issues would only be distractive, a renowned American economist recently said.
Like other wars, no winners will emerge from currency wars, as a nation can only succeed if others allow it to succeed, said Joseph Stiglitz, a Nobel prize winning American economist.
"An excessive focus on the currency issue would be distracting from the overall broad agenda" and mutually beneficial interests among nations, he said on the sidelines of a luncheon seminar held by the World Affairs Council of Washington D.C.
The United States, he said, needs to focus on getting its economy to prosper internally, which would help stanch currency disputes.
"If the U.S. economy is growing more rapidly, then other countries would find it more comfortable to allow their currencies to appreciate," he said, adding that otherwise, it's not easy for them to take care of their own industries and citizens.
Meanwhile, the scholar cautioned that the ultra-loose monetary policies of the U.S. Federal Reserve are making global financial markets unstable and might possibly create a new bubble rather than bolstering the nascent global economic recovery.
Stiglitz also commented on China-US economic ties. "China helps finance America's massive fiscal deficits. Without China's inexpensive goods, the standard of living of many Americans might be markedly lower, and America provides the markets for China's growing supply," he said.
As for the recession-hit world economy, Stiglitz stressed that coordinated global moves are crucial to the recovery and growth of the U.S., Chinese and other economies.
Although countries primarily cared about their own well-being during the latest global financial crisis and economic downturn, "the need for a coordinated global response and plan for recovery became clear," he wrote in his latest book entitled "Freefall: America, Free Markets, and the Sinking of the World Economy."
"Economic globalization has made the world more interdependent, increasing the need to act together and work cooperatively," he noted. As to the United States and China, respectively, the world's largest developed and developing economies, the two sides should endeavor to expand common ground, he said.
Washington and Beijing should move forward with the "understanding that they both benefit from each other's growth and restructuring strategies," he added.
Indonesia is the only Asean member of the G-20.
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