Word: dollar
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Dates: during 1970-1979
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FIGHT INFLATION. An immediate dollar-support program will only buy time while the Administration takes the more fundamental action necessary to correct the dollar's underlying weakness. The most important step would be a tough, credible anti-inflation program. Inflation, of course, debauches a currency by reducing its purchasing power. As long as the West German inflation rate is under 3% while the American rate is more than 8%, the dollar will continue to depreciate, and the mark will rise. An austerity program that brings American inflation down toward the German level is an inescapable move to support...
...world's money system. Since early 1973 the system has been based on floating rates: a currency's value is set by supply and demand on money markets. This replaced the old system in which rates were firmly fixed in relation to gold and the dollar. The earlier structure had served fairly well for almost three decades but then had broken down because exchange rates could be changed only abruptly, sharply and in a crisis atmosphere. Yet now with floating rates, the world endures a permanent crisis and fundamental economic instability, as currencies gyrate madly in response...
...have to cooperate closely, buying and selling currencies in order to keep the rates within certain ranges. Former Under Secretary of the Treasury Robert V. Roosa says that a first step toward this arrangement would be to set up "reasonable ranges of value for the three key currencies - the dollar, mark and yen." Other currencies would quickly fall into line behind the big three. The IMF could monitor national economic activity and recommend when currency values should be increased or decreased and by how much. Last April the IMF set up a "surveillance system" that could perform this function. Though...
...trauma. Oil price increases, world recession, rampant inflation, low growth and severe balance of trade problems have left leaders in the chancelleries and the counting houses doubting the present and fearing the future. But nothing has been worse in a period of crumbling foundations than the decline of the dollar, which is the talisman of an uncertain world. A first move toward a more secure economic future would be to re-establish the stability of the dollar inside a more managed and predictable international money system...
...nowhere near as politically sexy as trying to knock down inflation or prop up the dollar, but Jimmy Carter has another tough economic imperative on his hands: dealing with the trade deficit. Until the late 1960s, the U.S. routinely piled up comfortable surpluses almost without trying. Since then, rapidly rising imports of oil and manufactured goods combined with the relative slackening of the sales of American products abroad have tipped the trade balance perilously out of kilter. In the past three years, the excess of what the U.S. bought over what it sold abroad rocketed to a total...