Word: deficits
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Dates: during 1960-1969
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...prime borrowers, 5% for medium-sized companies, and 7% for consumers who make installment purchases. In large parts of Latin America, Asia and Africa, long-term capital is scarcely available at any price, and great chunks of it are hard to come by in Europe. Last week the deficit-ridden U.S. Government had to pay the highest rates since the Civil War - 6.45% - to float $730 million in bonds (see BUSINESS). Double-A corporate bonds market for as much as 6.8%, twice as high as in 1955. On a $40,000 mortgage in Washington, D.C., the tag is 6.5%, plus...
Lately, the long-term trend to capital tightness has been aggravated in the U.S. by the Government's large-scale bor rowings to finance its budget deficit. Through issues of securities and loans, the market generates about $70 billion in credit yearly. The Federal Government expects to borrow a phenomenal amount of that-about $22 billion in the fiscal year ending this June. Unless taxes are increased fairly soon and sharply, the Government will pull $17 billion more out of the capital market in the first six months of 1968 than in the first half of 1967. In consequence...
...speculators and most foreign governments profoundly. In 17 of the past 18 years, the U.ST has spent, lent or given away more money than it has taken in from abroad. Compared with the size of the U.S. economy (larger than all of Europe's), that balance of payments deficit seems trivial; it has averaged a mere 0.004% of the gross national product. But the dollars thus placed in foreign hands now total $34 billion, while the U.S. stock of gold has dwindled from a postwar peak of $24.6 billion to $10.4 billion last week, the thinnest gold line since...
Almost every private and public authority of the Western countries agrees that to avoid a genuinely serious threat to the dollar, the U.S. must dramatically pare the inflationary deficit in both its domestic budget and balance of payments. Says General Director Max Ikle of the Swiss National Bank: "The welfare of the world depends on confidence in the dollar, and this now depends on American fiscal policies...
Such controls left the fundamental causes of the dollar-threatening payments deficit uncurbed. Last week Federal Reserve Board Chairman William McChesney Martin summed up the result in gloomy terms. "We are faced with a budgetary problem that has been getting progressively worse-a sad progression toward undermining the currency," he told the Economic Club of Detroit. "The dollar is stronger than gold, but like it or not, the world no longer has the confidence in the dollar that it once had. People doubt that we can handle our own affairs." Economist Raymond Saulnier, who was chairman of the Council...