Word: indexable
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...Treasury Secretary suggest a new role for gold in international economic affairs. To be sure, Baker was not advocating a return to the gold standard, in which the price of the precious metal would be fixed in all the major currencies. But the Secretary said countries might use an index of the worldwide prices of gold and other heavily traded commodities as a partial guide in coordinating economic policies. If that index was rising, for example, it would be a sign of inflationary pressures, and nations might decide jointly to raise interest rates to prevent rapid price increases...
...costs, which have been increasing about 7% annually. How is a family's nest egg supposed to keep up? A new special-purpose financial institution, the College Savings Bank of Princeton, N.J., is offering a novel solution: a certificate of deposit featuring an interest rate tied to an annual index of higher-education costs. Says Bank Chairman Peter Roberts: "With us, families have shifted the risk ((of rising tuition and inflation)) from the household to the bank." Even if a child skips college, the parents can still cash in the CollegeSure CD for the full amount of savings and interest...
That situation sets the market up for a fall, when investors suddenly realize the party is over. Already, the Dow Jones industrial average has started to show signs of second thoughts. Between late August and mid- September the index fell almost 200 points, prompting investors to wonder whether the reckoning was finally at hand. But last week came relief. The Dow took a 75.23-point jump on Tuesday, the largest one-day advance in history, before easing back to 2570.17, up 45.53 for the week...
...superabundance of financial innovation is another factor reminiscent of the 1920s. During that time, investment trusts and utility pyramids were the rage, while the 1980s has been a boom time for such techniques and instruments as leveraged buyouts, junk bonds and stock-index futures. The common element is vast leverage, which creates the potential for big profits during a booming economy but equally dramatic losses when the tide goes the other...
...such enormous overseas obligations that these could, if liquidated, create a very, very nasty run on the dollar and also a nasty collapse of the stock market." Adding to the jitters about the dollar is the rising level of U.S. inflation. Last week the Government said the Consumer Price Index rose at an annual rate of 5.8% during August. Last year's pace was only...