Word: dollarization
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Dates: during 1980-1989
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MOST economic experts agree that the trade deficit is the result of more than an overvalued dollar. American industry is getting beaten in the world market by being slow to innovate. Surpluses that foreign countries channel into research and development are divied up by American companies as short-term profits. While foreign governments help develop new competitive advantages for their companies, our elected leaders allow Wall Street executives to squander time and money on corporate takeovers, which produce nothing...
UNFORTUNATELY, Feldstein accepts these trends as a given. He wrote, "...the dollar now has to be lower than would have been necessary a decade ago. This is reinforced by such fundamental factors as the increasing competitiveness of the newly industrialized countries of Asia...
...dollar value can compensate for a massively inefficient, stagnating industrial sector. In the book "The Zero-Sum Solution," MIT economist Lester Thurow pointed out that "problems of international competitiveness will be with Americans even after the dollar falls...
THERE are also more immediate harmful consequences of a lower dollar. As American goods get cheaper, so do American land, assets and factories. Already more than one-fifth of all domestic bank assets are owned by foreign banks...
Foreign ownership of American farms, companies, banks and bonds has almost doubled since 1981 and now approaches $1.5 trillion. A lower dollar will eventually increase American exports--but will it be America any longer...