Jack Lew: "There Are A Lot Of Economies That Need To Use All The Levers That Are Only Using Some"

The strength of U.S. dollar and turmoil in various economies around the world and especially in Greece has rattled many nerves. Are these crises going to end soon?

U.S. Treasury Secretary Jack Lew was recently on Bloomberg to answer that question.

Using All The Levers

“I think as people look around the world, they look at the United States as a real engine of growth right now and I’m pleased that the United States is doing much better,” Lew said. “And there’s a lot of attention on how resilient and how much the U.S. economy has recovered.”

“I look around the world and there’s clearly a need for more attention to how to generate faster, more sustainable growth. I think that as you look around the world, there’s areas where there’s a need for more use of some of the policy levers that are available.”

He continued, “You know, we took advantage of all the policy levers to get our economy back in gear. Monetary policy, fiscal policy, reforms, particularly in the financial area. There are a lot of economies that need to use all the levers that are only using some.”

Europe

Lew was asked to specifically name the economies that are not using all the levers. He replied, “Look, we go around the world and there’s clearly a shortage of demand in a number of places. Europe, demand has been soft. Policy could help drive demand.”

“You know, the monetary policy tools are being used, the fiscal policy tools, and the reforms that are needed in many parts of the economy would be very well-timed if they were put in place along with the monetary tools.”

Japan

He continued, “You go to Asia, and in Japan and China, you know, Japan has a policy, three arrows, they use monetary policy out of the box, fiscal policy out of the box. A little bit of, you know, kind of question as to how to balance their long-term need to get their debt control with the need to have fiscal policy that keeps growth moving in the short-term.”

“The reforms have been a little slower, they need to get those into place and they need to keep focused on the fiscal tools as well as the monetary tools.”

China

“And you get to China and China has enormous reforms on the agenda, in terms of what it’s set forth to move its economy toward the more market-oriented, market-driven approach. Moving those reforms forward, opening their economy, their markets, their financial system to market forces is critically important. The sooner they do that, the better,” Lew concluded.