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Money makes the world go round

The Star Tribune reported that the Group of Seven industrialized countries met Feb. 2 and promised to work together in order to restore the global market economy.

While no specific solution was agreed on, the G-7 assured the world's biggest economy would grow this year but at a much slower rate.

A key focus of the meeting was to reassure the Group – and the rest of the world – that the United States’ economy was not in a recession.

“I believe that we're going to keep growing,? U.S. Treasury Secretary Henry Paulson said. “If you're growing, you're not in recession.?

However, the Group speculated that the U.S. had encouraged its trading partners to cut interest rates and start offering tax rebates. Paulson dismissed the speculation.

“Every country's different ... and every country needs to focus on their own economic situation,? he said. “The discussion was on really how do we minimize the spillover from what's going on in the capital markets to the broader global economy.?

The U.S.’s approach involves a $168 billion stimulus package of tax rebates, business tax write-offs and other similar actions.

The European Central Bank and other trading partners, however, did not follow the United States’ lead. This is because they are focused on avoiding inflation rather than stimulating growth, according to Jean-Claude Trichet, the European Central Bank president.

“We will do whatever we need to do to be credible in maintaining price stability in the medium term,? he said.