Word: lira
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Dates: during 1960-1969
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...bound to come up on the other side of disaster with a patchwork government that will last until the next one, pointing again to their great miracolo, the economic miracle that the nation's leaders always cite as proof that there is really no cause for concern. The lira is so strong that some rumors speak of an upward revaluation. Gold reserves increased by $383 million in the twelve months ending Oct. 1, the largest increase of any country in the world for that period. The Italians must be doing something right. But they must be doing something wrong...
...only partial use of her legs. After a Navy court-martial, the sailor went to prison for ten months. As far as the Italians were concerned, the U.S. Government was prepared to consider their claims for damages. But Mrs. Shapiro was unable to collect a dollar, much less a lira...
...Guido Carli, now 52, governor of the Bank of Italy and a sound moneyman if ever there was one, took action. Carli traveled to Washington, came back with a $1.2 billion line-of-credit offer. Though little of the credit was actually used, its mere promise helped stabilize the lira. Next, Carli imposed a tight-money policy on Italy's banking system; among other things, banks were limited in the amount of their foreign borrowing. Under prodding from Carli, the Italian government cut its own spending, added taxes on autos and gasoline...
Carli's policies were not without side effects. As he says, rather ruefully: "We have saved the lira and stabilized the economy-but we've left a lot of corpses in the streets." Among them were many small, inefficient businesses that died when their credit was cut off. But the overall results have been dramatically successful. During the past year, Italian production has risen by 8% -while the cost of living has gone up only 2%. Gold and foreign-exchange reserves have swelled to a record $4.5 billion. And the balance of payments shows a healthy $277 million...
Carli is still not satisfied; he wants the government to cut back further in its spending, argues that wage and price increases ought to be tied more closely to productivity. Even so, he deserves credit for the fact that the talk nowadays is not about devaluing the lira but rather of revaluing it upward...