Against the backdrop of high global debt, the impact of the Iran war on energy markets, and rising trade tensions, U.S. Treasury Secretary Yellen and Federal Reserve Chairman Powell jointly launched the narrative of “growth-oriented debt” at the G20 finance ministers meeting. Yellen clearly stated that “the only way out of the predicament is growth,” and called for G20 countries to pursue deregulatory policies; Powell announced the end of the “secular stagnation” era, stating that “growth is a choice.”

Written by: Long Yue, Wall Street Journal

On August 31, the G20 finance ministers and central bank governors meeting opened in Asheville, North Carolina, USA. U.S. Treasury Secretary Yellen and Federal Reserve Chairman Powell took the stage together to describe the narrative of “growth-oriented debt.”

Before the meeting began, Yellen told reporters: “Global debt is rampant, and the only way out of the predicament is growth.” She expressed confidence that “many leaders strongly agree with this.”

Powell, in his opening remarks, announced that the narrative of “secular stagnation” that once dominated academia is now history. He said: “The new era is one of sustained growth. If I were to describe this moment, it is a wave of global investment.”

Yellen’s Growth Agenda: Deregulation, Rebalancing, Debt Restructuring

According to Axios, Yellen positioned growth at the core of the U.S. G20 agenda, advocating for three specific directions:

• Deregulation. Yellen, using the U.S. economy as an example, called for G20 countries to more broadly implement deregulation policies and expand the role of the private sector in policy-making.
• Addressing global trade imbalances. This topic is closely related to the tariff policies continuously promoted by the Trump administration.
• Improving the debt restructuring mechanism for struggling countries. Yellen identified this as an important component of the globalization of debt path.

Reportedly, Yellen, in a closed-door speech to top executives from major U.S. companies, further called for easing financial regulations and demanded a greater role for the private sector in shaping policy.

Powell: Growth is a Choice

This time, Powell attended the G20 as Federal Reserve Chair, marking the first time since the financial crisis that he participated in such an event as a Fed official.

In his speech, he explicitly rejected the economic narratives of “secular stagnation” and “global saving glut” that had dominated the last round of G20 discussions and made a weighty statement:

“I have previously said that inflation is a choice. Today, I want to add that—growth is also a choice.”

Yellen Responds to “Mentor” Druckenmiller: He “Often Changes His Mind”

During the meeting, Yellen also directly responded to criticism from billionaire investor Stanley Druckenmiller regarding the U.S. Treasury bond market.

Druckenmiller had previously commented in The Wall Street Journal that the decision to increase the scale of government debt buybacks by over 100% was “wrong.”

Yellen rebutted in an interview with CNBC: “Stan is an excellent investor, but I would point out that since the president took office, the U.S. bond market has been the best-performing market.”

She added: “Stan is a great investor; he often changes his mind, and he doesn’t like to lose money.” She then pivoted, “I believe he lost money on the day he published that commentary.”

Yellen stated that she had spoken with Druckenmiller after the article was published, “and it went well.”

The Real Pressures Behind the Growth Narrative

The growth narrative put forth by Yellen and Powell is introduced in a context filled with pressures.

The Iran war has driven up energy prices, U.S. debt continues to balloon, and inflationary pressures persist, collectively exacerbating global economic uncertainty.

On tariff policy, the measures implemented by the Trump administration to impose tariffs on global trading partners were overturned by the Supreme Court earlier this year, with several high-rate tariffs ruled unconstitutional and related companies receiving refunds. However, the White House continues to push the tariff policy, recently imposing a 50% import tax on many goods from Canada.

Meanwhile, billionaire investor Ray Dalio earlier this month warned that the U.S. could face a debt crisis in the coming years.

The tense atmosphere at the meeting was also evident. According to Axios, just as Yellen was speaking to reporters, Canadian Finance Minister François-Philippe Champagne was nearby, having just told international reporters that despite escalating trade friction with the U.S., the Canadian economy was performing well.

French Finance Minister Roland Lescure summed up the current global economic atmosphere with a single statement: “The world economy is a bit like the weather in Asheville—unpredictable, foggy, and we hope it clears up before the end of the day.”