Word: dollarization
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Dates: during 1980-1989
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Greenspan's lot may be even tougher than Volcker's was. The new chairman must fend off a recession by keeping interest rates low, but he will come under excruciating pressure to raise them again if the dollar needs rescuing. Any little upward nudge in interest rates, however, is likely to send the stock market into the tank again. When the Fed's open market committee met last week for the first time since the crash, some economists hoped the group might rescind September's discount-rate increase. But no such announcement came. One reason may be that the committee...
What may finally have persuaded the Finance Minister to make at least a mild concession on interest rates was the beating that German exporters are taking because of the rise of the mark against the dollar, which makes their products more expensive in the U.S. In an interview last week, Stoltenberg told a West German newspaper, "We now want to cooperate again constructively." One eventual outcome could be a meeting among the finance ministers of the seven major industrial democracies, the so-called G-7 group, to work out a plan to support the dollar at its new, lower level...
DESCRIPTION: U.S. dollar vs. Japan's yen and West Germany's mark. Color illustration: Uncle Sam, turning his back on the dollar, reads Stock reports in newspaper...
...with inflation include printing three additional zeros on its 20-cordoba bills in order to provide a denomination of some practical use. There are so many exchange rates that a visitor sometimes feels trapped in a hall of mirrors. For external debt, the rate is 70 cordobas to the dollar. The official rate for visitors is 9,500 cordobas to the dollar, while the flourishing black-market rate is up to , 18,000. A briefcase is needed to collect the exchange on a $100 bill -- unless the exchange is in small-denomination notes, when a suitcase might be more useful...
...trade deficit. But no one can argue that such a strategy offers a simple and painless cure for America's economic ills. On the contrary, the perils are enormous and the effectiveness is uncertain. The immediate challenge for the Federal Reserve and the U.S. Treasury is to control the dollar's descent -- no easy feat -- and prevent a free fall, which would scare off foreign investors, drive up U.S. interest rates and perhaps cause another panic on Wall Street. But even a gradual decline of the dollar is no panacea. It will impose hardships on the U.S. economy that cannot...