Word: indexes
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Dates: during 1970-1979
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...last October, according to an index kept by Morgan Guaranty Trust Co., the dollar had lost more than 9% of its value, measured in terms of major foreign currencies, since December 1971. By January, the loss had shriveled to a mere one-half of 1%, but by last week it was back up to 8.1%. The decline makes American products cheaper overseas and thus easier to export. But it also fans U.S. inflation by making imports more expensive. And it adds greatly to the bills run up by tourists, who are still being lured by now outdated airline ads that...
...Indexing in one form or another is already being widely practiced. Wages are now indexed in many European countries. Last year Canada adopted a system of hinging income tax liability to price rises. In the U.S., "escalator clauses" tying wage rates to prices are familiar, and Social Security payments now automatically escalate with the consumer price index. Last week Republican Senator James Buckley of New York introduced a bill to tie tax liability and the value of Government bonds to movements in price indexes. Most significant, wholesale indexing has been a critical factor in cooling Brazil's scorching inflation...
...there are reasons to suspect the success of indexing, even in Brazil. For one thing, a 39% inflation rate is scarcely anything to celebrate. For another, a large part of the credit for containing inflation in Brazil must go not to indexing but to the country's stern wage-price controls. Strikes are banned, what unions exist are kept weak, and yearly wage increases are held below productivity gains. The price index is also blatantly manipulated. It is heavily weighted to living costs prevailing in the state of Guanabara (where Rio de Janeiro is located), where prices trail those...
Staying Ahead. Even when efficiently administered, indexing is open to a crushing objection. By enshrining a particular rate of inflation-say, 7% -indexing actually increases the pressures for a greater rate. The union leader who knows that the price index will rise 7% and that the wages of the workers he represents will go up that much automatically may then bargain for a 10% increase; the businessman who knows that the wages of his workers and the interest he pays on his debts will go up at least 7% may try for a 10% price boost to stay ahead. Thus...
...even send its efficient military into both territories. "We cannot make big concessions here, even if Lisbon orders them," one Portuguese official in Mozambique argues. "If we did, the South Africans would be across the border tomorrow in force, uninvited, and simply take over." In Johannesburg, the gold-share index dropped 9% in two days in response to the unwelcome news of the coup...