Word: money
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Dates: during 1960-1969
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MOST of the speculative money that flooded into West Germany last week came from a volatile and increasingly powerful segment of the world's financial apparatus: the Eurodollar market. That market is a curious byproduct of two decades of U.S. balance of payments deficits. Eurodollars are nothing more than U.S. dollars on deposit in private banks abroad. The pool was organized in the late 1950s by London bankers who sensed that if they could marshal the billions of dollars already overseas, they could lend them out at a substantial profit. Business has been brisk ever since...
...global scale. It involves roughly 500 banks in 40 countries. The banks accept deposits (minimum: $25,000) and arrange loans (usually from $100,000 up) among one another and with their customers over a telephone and Telex network. Fed most years by continuing U.S. payments deficits, the pool of money has grown geometrically from $8 billion in 1964 to $16 billion in 1967 to $27 billion at the end of April...
...finance world trade and the growth of international corporations. They bankroll oil exploration, highway construction and even occasional European government deficits. Without them, Europe would lack the investment capital to sustain its present Dace of economic growth. The Eurodollar pool has also become a leading haven for nervous money. Fearful of devaluation, individual speculators and treasurers of large corporations swap comparatively weak currencies like British pounds or French francs for Eurodollars...
...immediate reason for the jump to last week's peak was the rush to borrow Eurodollars for conversion into German marks. Big-time speculators found it much easier to borrow on the Eurodollar market than to dig into their own pockets for the money...
Nixon suggested that the dividend be split between a tax reduction and social programs, particularly aid to education. Before he joined the Administration, Economic Adviser Stein headed a Committee for Economic Development group that proposed spending most of the money to alleviate urban, racial and poverty problems. The group also recommended cutting the basic corporate income tax back to 38%, down from the "temporary" Korean War rate of 48%. In any case, debate over the peace dividend should lead to a valuable new appraisal of the nation's priorities-and its fresh opportunities...