Word: dollarization
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Dates: during 1980-1989
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...spending is weak and likely to weaken further," he says. "Wages have just not kept up with inflation." Johsen Takahashi, of the Mitsubishi Research Institute in Tokyo, predicts a .5% decline for the U.S. economy in 1988: "The stock market will take another plunge next year, as will the dollar." The outlook, he warns, is "very...
...figures were released, then recovered a bit on Friday to close at 1867.04, up 100.30 for the week. Economists were encouraged that the record deficit did not send the stock market into a free fall; they remembered well that a less bleak trade report and a drop in the dollar helped trigger the Black Monday crash. The reason for the milder market reaction this time was that investors were no longer afraid that the Administration and the Federal Reserve will try to defend the dollar with higher interest rates...
Experts have been surprised for months now that the long fall of the dollar, which has declined by 40% against the major currencies since early 1985, has not produced a turnaround in the trade balance. According to economic theory, a cheaper dollar makes U.S. products less expensive to foreigners and thus eventually boosts demand for American exports. Conversely, a weak dollar makes foreign goods more costly in the U.S. and dampens Americans' enthusiasm for imports. That, in fact, is what has happened: this year exports have increased, and the growth of imports has slowed sharply. The problem is that with...
Only if the dollar's descent slows down will the U.S. at last enjoy an improvement in the trade deficit. Most of the economists surveyed said the dollar would indeed become more stable. Their median forecast has the dollar drifting down only 2.3% next year against the yen and 1.8% against the mark. At the same time, they predicted, the trade deficit will fall nearly 15%, from a record $175 billion this year to about $150 billion...
...large extent, the fate of the dollar -- and the entire U.S. economy -- is in the hands of Chairman Alan Greenspan and the other governors of the Federal Reserve Board. As always, Greenspan faces some hard choices. If he raises interest rates to prop up the dollar, he risks stifling economic activity and triggering a recession. But if he allows the money supply to grow too quickly, and interest rates drop, the dollar could go into a further nose dive, and inflation would take...