opinion
ours
tom thompson
Anxiety over the falling dollar
The American dollar has fallen sharply
over the last year, particularly in terms of
the West German mark, the Japanese yen
and the Swiss franc. Many analysts now
fear the dollar will fall still further, adding to
domestic inflation pressures, depressing
global trade growth prospects and con
tributing to nervousness in financial mar
kets.
At the annual meetina of the International
Monetary Fund (IMF) recently, ministers
from more than 100 countries have been in
Washington, D C., to discuss the dollar’s
plight.
The dollar is the prime currency used in
international trade; it is held in the reserves
of many national governments. Thus, its
value is of crucial importance to all coun
tries.
Private bankers by the hundreds were at
the IMF meeting, spreading gloom about
the dollar's prospects while negotiating
loans with various officials from foreign
countries. No doubt they were also seeking
advice from Arab countries as to whether to
dump some of their substantial dollar hold
ings and turn to other currencies or even
gold.
The meetings themselves did not pro
duce solutions to the dollar’s ailments, but
they did help clarify the full consequences
for the world of a further, steep erosion in
the dollar’s value.
The fall in the dollar has added to the cost
of foreign vacations, as thousands of
Americans discovered over the past sum
mer. More importantly, it has increased the
prices of imported goods and commodities
purchased here, adding one full percentage
point to this year’s U.S. consumer price
index. Efforts to stem the dollar’s decline
are thus in themselves anti-inflation actions
for this country.
The dollar’s decline has reduced the
value of a large portion of the $240 billion of
currency reserves held by all national gov
ernments. It has reduced the real incomes
of most nations, which use the dollar as
their main currency unit in foreign trade. It
has, for example, reduced the effective in
come of oil-exporting countries, thus increas
ing the probability that these nations will
raise the international oil price before long.
Worst of all it has made many foreign
governments consider actions to reduce
their dependence on the dollar. The Euro
peans are considering what they call a
“zone of monetary stability” with a brand
new currency of their own. The oil exporters
are thinking about using some other unit
than the dollar to set oil prices.
Why has the dollar continued to fall?
Without doubt the supply of greenbacks
now far exceeds the demand. Easy credit
policies by the Federal Reserve Board,
combined with continuing large budget de
ficits, have added to inflationary pressures
and so reduced the attractiveness of the
dollar to foreign investors.
Many foreign bankers would agree with
Ellmore Patterson, chairman of Morgan
Guaranty Trust Company, who says, “Al
though we repeatedly tell ourselves that in
flation is our No. 1 economic problem, we
are exceedingly skillful in developina
rationalizations for avoiding all but the mild
est of remedies. I am afraid it is no exag
eration to say that, to a disturbing degree,
we are a nation adrift in terms of economic
policy. We talk, we diagnose, but we cannot
seem to muster the will to act decisively."
In addition to failures on the inflation
front, the nation has amassed a huge
balance-of-payments deficit by simply im
porting far more goods than it exports.
Few foreign financiers today seem to
have much confidence that the U.S. has the
will to act on this front.
Foreigners want the U.S. to implement
an affective energy program. By this they
mean measures that directly clamp down
on oil imports, such as oil import tariffs, and
not just actions concerning home insulation
and natural gas prices.
Arrangements can be made to aid the
dollar. Some governments, such as the
Swiss, German and Japanese, can in
crease credit lines to the Federal Reserve
system, so as to enable the Fed’s to buy
more dollars in the markets with foreign
currencies and thus support the dollar’s ex
change rate.
In addition, some foreign governments
could assure the U.S. that they will take
measures to stem inflows of dollar to their
currencies and to reduce the volume of dol
lar loans made by banks overseas.
Further, numerous governments with
large reserves of dollars, such as Saudi
Arabia, could promise to hold onto their dol
lars and so reduce selling pressures.
But all such actions, like increased U.S.
treasury gold sales, would probably have
only a short-term impact. Foreign confi
dence in America’s economic prospects
and in the economic management skills of
America's leaders is at a low ebb.
No evidence exists that U.S. foreign
payments deficit will fall sharply. Nor is
there any reason to believe that inflation in
1979 will be less than that in 1978.
The Carter administration, the Federal
Reserve system, the Congress, and, of
course, the American public, have to realize
no substitute exists for an effective energy
program and stern monetary and fiscal dis
cipline.
The right thing
Too, often, it seems, our would-be heroes (and heroines)
trip over their pocketbooks on their way out to save the world.
This week, somebody finally got it right.
The UO Bookstore board of directors has ordered the sale
of bonds it holds from companies doing business in South Africa.
In order to accomplish the divestiture of a few thousand
dollars in bonds, the bookstore will have to sell a portfolio of
securities valued at nearly $100,000. That means a $1,000 to
$4,000 loss in sales costs: the price of being right.
The cost, however, is well worth the demonstration of book
store patrons’ sentiments regarding South Africa’s viciously ra
cist apartheid policies. It also sets an example for the State
Board of Higher Education, which has been requested to divest
its much larger portfolio of stocks in South Africa’s business
supporters.
Reformers, particularly reformers from academia, often are
attacked for recommending changes that will mean dollar loss
for others, but not for themselves.
The bookstore board’s action should discredit that argu
ment somewhat. Students, who in a referendum last year voted
their support of divestiture, will bear the cost of the board’s
decision through their bookstore purchases.
Although the decision may not save the world, it will, at the
least, help save our honor.
The wrong thing
Well, this ought to bring in some letters.
Being dog-owners and students ourselves, we hold no
grudge against the domesticated beast.
But the owner of the barking dog that gets parked between
Allen and Lawrence halls during classes is winning no friends for
himself, his hound, dogs in general or their human companions
Neither are the human/dog frisbee teams on the campus’
open areas. Nor the student wandering around outside the lib
rary calling for his strayed pooch.
These are the same persons, we suspect, who leave their
German shepherds locked up in Honda Civics on summer days
or ignore their Lab retrievers coursing along Pre s Trail and city
bikeways to the peril of joggers, cyclists and pedestrians alike.
The signs on campus tell us that leashed, attended dogs are
acceptable. These other examples are not.
Ultimately, campus security or the city’s animal patrol be
come the arbiters of right and wrong in students’ control of their
dogs.
Common sense and respect for neighbors should resolve
the issue well short of those recourses.
Page 4
yours
Weird, huh? They’re exchange students from France.”
SptSwSspm.
Computerized
Registration
In reference to “Computer
Scheduling? Not Yet" (ODE, Oct.
Why not pre-registration?
First, look at the time and effort
it would save both students and
faculty. Second, you wouldn’t
have to cut out an extra few days
from your schedule just to register
for fall or any other term. Third,
you wouldn’t have to say, "Yeah, I
have to go down to Eugene early
to register.”
Even if the students here could
pre-register one term only to start
with, it would be a small step to
ward a possible full system at UO.
I really think it’s been a long time
coming . . .
I’ve been back East and ob
served how much easier it is for
students to get the classes (a ma
jority of them non-cancelled) they
not only want but need for their
majors. And all of this without the
hassle right before the term be
gins. They know in advance what
classes they are going to take
which is a big load off the fall re
gistration procedure.
What do you say guys? With all
of your “hurdles," it’s about time
you made your way to the starting
line.
J. Weinstein
Freshman,
business administration
Friday, October 13,1978