Word: dollarization
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Dates: during 1980-1989
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...last week's meeting. Said he: "This recovery is very different from past upturns. The fact that more and more people are assuming that the Government will borrow $200 billion or more annually for the next three or four years is bound to keep interest rates and the dollar's exchange rate high. While the economy will most likely continue to grow through the next couple of years, the deficit is undoubtedly increasing the risk that the recovery will run out of steam." He warned that another slump might come as early...
Real rates have stayed higher in the U.S. than in many other industrial nations. Partly for that reason, legions of foreigners have been converting their money into dollars for investment in the U.S. In the process, they helped push the value of the dollar to new peaks on international exchange markets. Since 1980 it has surged 55% against the West German mark and 102% against the French franc. The rapid rise has made many American exports prohibitively expensive on world markets. As a result, Feldstein said, the U.S. merchandise trade deficit is likely to hit a record $60 billion...
Such a large trade gap will put pressure on the dollar. Some forecasters have predicted a sudden collapse in its value, but TIME'S board believes that any decline is likely to be gradual, perhaps 4% to 5% over the next year. "The dollar is not headed for a free fall," said Heller, "but soon it should be gentling downward...
...substantial drop in interest rates and the dollar's exchange rate will not come, Feldstein said, unless Congress moves to pare the federal deficit. TIME'S economists agreed, however, that with an election year coming up, few politicians would be willing to lead a drive to slash spending or raise taxes. Predictably, the House voted last week to authorize an additional $1.6 billion for ten education and health programs in an effort to reverse some spending cuts made early in the Reagan Administration. House Speaker Tip O'Neill declared that any tax-hike initiative would have...
...knew he would have to go above that. Chrysler Chairman Lee Iacocca last week sent Robert S. Miller, executive vice president of finance, to New York City with a Spartan dictum. Said Miller: "He told me that if the bid was a penny too low or more than a dollar too high not to come home...