Word: dollarization
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Dates: during 1980-1989
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...predict. Since 1981, PUSH has signed contracts with five firms: Coca-Cola, Seven-Up, Kentucky Fried Chicken, Burger King and Southland Corp., which owns 7-Eleven minimarkets and Chief auto-parts stores. Jackson's goal in these agreements, which are not legally binding, is to get a dollar's worth of economic benefits for blacks in return for every dollar blacks spend on the companies' products, as determined through market research...
...decision to plunge into the foreign-exchange market was made two weeks ago by Treasury Secretary Donald Regan, who is responsible for such transactions. Although he had been predicting a drop in the dollar's value, Regan became alarmed while monitoring the U.S. currency's surge on a desktop computer in his office. He gave the order to intervene quietly on July 29 after talking with Federal Reserve Chairman Paul Volcker and other officials. The U.S. acted with West Germany for one trading day before the other nations joined in last week...
...first, traders hardly noticed the intervention. Foreign-exchange markets swap tens of billions of dollars' worth of currency daily, and the U.S. actions had little impact. "The markets were not impressed," said one European banking official. To get their attention, Washington had to announce formally that it was intervening. That worked briefly, but once the psychological effect of the announcement had worn off, the dollar started climbing again and hit new records at the end of the week...
...joint intervention was the largest since 1979, when the Carter Administration launched a $30 billion effort to prop up what was then a sinking dollar. The Reagan White House, by contrast, has preferred a hands-off policy toward the currency's price. After the attempted presidential assassination in 1981, it stepped in to calm foreign-exchange markets, and it did so again last October, largely to ease jitters over a possible Brazilian default. But each time Washington pumped in no more than $100 million...
Most private experts and foreign leaders agree, however, that the U.S. will have to slash the federal budget deficit to well below $200 billion before it can effectively contain its currency. "You simply won't get any change in the dollar until the budget process is brought under control," argues Rimmer de Vries, chief international economist for Morgan Guaranty Trust. The deficit for the coming year is now estimated at $180 billion or so, but it may have to shrink a lot more before any Government intervention will stop the U.S. from serving as a magnet for cash from...