Word: greenbackism
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...contradictions appear to mirror an equally mixed-up management of the economy by the Carter Administration. Policy zigged from talking up a tough tax reform to abandoning most of it, zagged from professing unconcern about the dollar's slide to intervening actively in currency markets to prop up the greenback. Noting Carter's propensity for listening first to one economic adviser, then to another, Washington wits began quoting, accurately or not, a scathing description of Franklin Roosevelt supposedly offered by Economist John Maynard Keynes: "The President is like a big, fluffy pillow. He bears the imprint of the last person...
...Government's decision two weeks ago to intervene in foreign currency markets to keep the value of the dollar from sinking too fast has halted the rapid decline of the greenback, at least temporarily. But some foreign moneymen think that the U.S. is being too timid in buying up unwanted dollars. Meanwhile, the effort to bolster the buck is having unfortunate side effects. In order to make U.S. currency more attractive to foreign investors, the Federal Reserve Board has raised American interest rates another notch.* It boosted the discount rate, the charge imposed on Federal Reserve loans to member...
...Living costs abroad. Americans traveling or residing overseas have felt the effect of the dollar's drop most immediately and directly, especially in such countries as West Germany and Switzerland, where the greenback's decline against local currency has been severe. In Switzerland the franc has risen 25% against the dollar in the past year. A tourist couple may well spend $45 for a not particularly lavish dinner with a bottle of wine, v. $36 a year ago-even though the price of the meal in Swiss francs has not changed. In West Germany, where the inflation rate...
...Operations of multinational companies. They get some benefit from a weaker greenback because profits earned in, say, West German marks or Swiss francs are worth more dollars to be sent back to the parent company in dividends, though this can be offset by the greater dollar operating costs abroad. Also, American-owned multinationals have been slowing down investment abroad. One reason is the sluggishness of European and Japanese economies. The drop of the dollar has added another reason, by increasing the amount of dollars that multinationals must spend to build, buy or expand foreign factories. Weakened American investment abroad prolongs...
Washington officials correctly point out that so far this year the 'trade weighted" value of the dollar has dropped only about 2% on average against 15 foreign currencies. Major reason: the greenback has been going up against the Canadian dollar and the Mexican peso, the currencies of two of the most important U.S. trading partners. Some economists also argue that the fall of the dollar should help to shrink the U.S. trade deficit by making U.S. exports cheaper and imports more expensive...