Word: dollarize
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Dates: during 2000-2009
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...this situation isn't all bad. The dollar is now low enough to make the U.S. a cheap place in which to travel, do business and buy things. Americans visiting Europe or the U.K. know an expensive currency when they see one. New Yorkers returning from London say the prices there look almost the same as in New York, except they are quoted in British pounds, which are now worth more than $2 each. I learned of a delegation of wealthy Chinese entrepreneurs who on a recent visit to America insisted on going to discount malls to buy designer goods...
...trillion a year in benefits to the U.S. economy. Even the offshoring of white-collar jobs, despite the hardship it brings for laid-off workers, is a net gain for developed nations like the U.S. and Japan, as well as for the country where the jobs land. Every dollar of spending that U.S. companies transfer to India creates $1.46 in new wealth, according to McKinsey & Company, a management consultancy...
...weak dollar also makes U.S. asset prices attractive to foreign investors. U.S. interest rates are higher than those in Continental Europe and are much higher than Japanese rates. Similarly, U.S. stocks look better by comparison. Measured in euros or pounds, the S&P 500 index is up less than 50% from its October 2002 lows, while European markets have more than doubled. Plus, Standard and Poor's recently reported that 44.2% of the revenues of companies in the S&P 500 index were generated abroad, up from 32% five years ago. With almost half of their revenues being earned...
...opportunities elsewhere. They are on the lookout for signs that Americans will not welcome foreign purchases of domestic companies-they remember the Congressional opposition to the bid by CNOOC, the Chinese oil giant, for U.S.-based Unocal. If barriers are raised against the acquisition of U.S. assets, then the dollar will be dumped on the foreign-exchange market and money will flow into currencies in countries where such investments will be welcome. And if foreigners turn away from dollar investments, the economic repercussions will be severe. Without overseas buyers, stock and bond prices in the U.S. will fall...
...This outcome can be avoided. The biggest risk to capital markets is protectionist policies that reduce capital flows and discourage foreign investors from accumulating dollar assets. Economics is all about engaging in transactions that make both sides better off. U.S. capital markets need Asian investors, and Asians want to sell to American consumers. Trading goods for assets will improve the welfare of both. If roadblocks go up, the real losers will be Americans who would see higher inflation and sinking asset values...