Word: dollarization
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Dates: during 1980-1989
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...months, portents have flashed across the financial heavens, feeding expectations of renewed vigor for the sluggish world economy. The price of oil has been in free fall, lifting a multibillion-dollar burden from industrialized and Third World countries. International interest rates have been dropping steadily, clearing away yet another obstacle to growth. In the U.S., the declining dollar has been named a harbinger of strengthened international competitiveness, meaning that the country's bedraggled manufacturing and farming sectors would once again revive and help refuel the world's foremost engine of economic expansion...
...decline of the dollar has at least temporarily derailed the mighty export machines of West Germany and Japan. As the relative value of their currencies has risen, their products have become more expensive in the U.S. Partly for that reason, West Germany's gross national product decreased 1% in the first quarter, and Japan's .5%, its first contraction in eleven years...
Equally frustrating has been the long wait for a positive impact from the falling value of the dollar, which has declined 26% against an average of major currencies since early 1985. The drop -- engineered in part by concerted action on the part of the central banks of the U.S., Japan, Britain, West Germany and France -- was supposed to make America's goods cheaper in comparison with foreign alternatives, thereby throttling back the country's imports and spurring its exports. That in turn should have curbed the record U.S. trade deficit ($148.5 billion last year), which has crippled many American industries...
...first, though, the decline in the dollar actually boosted the trade deficit. Reason: American importers had already ordered large quantities of foreign goods, which immediately became more expensive in dollar terms as the U.S. currency declined in worth and thus drove up the nation's import bill. As Americans lose some of their appetite for increasingly expensive foreign goods, importers are expected to cut back sharply on their orders. But that trend has been very slow to develop, and TIME's economists do not foresee a significant lowering of the trade deficit until 1987. One reason for the delay...
...print publishers are so sanguine. One longtime editor believes, "Every dollar spent on tapes is taken away from the essence of literacy -- the printed book that started it all." Peter Israel, president of the Putnam Publishing Group, Inc., dismisses talking books as a "fad, certainly, but I'm not sure it's a real business." But those who have made a commitment to electronic literature beg to differ. Newman Communications Corp., one of the fastest-growing tape publishers in the U.S., began in 1981 with sales of less than $200,000, which leaped to more than $7 million three years...