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Politics : Ask Michael Burke

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To: Ilaine who wrote (45912)	2/5/1999 4:59:00 PM
From: Defrocked	Read Replies (2) of 132070

For your homework, check out references to the Plaza and Louvre Accords, initiated by the G7 and fully supported by US Treasury Sec. James Baker. To "cure" our export imbalances, driving down the value of the dollar was thought to be a "good thing". Of course the FX market fully concurred or it wouldn't have worked. After all, if the US government trash talks its own currency why would anyone want to hold it? Interest rates were generally rising (on a lagged basis) during this time as a result of the huge stimulus provided by the Fed in 83/84 to pull the oil and ag. patches out of the dumps. Since RTC funding was in full swing simultaneously, along with large US deficits, the dollar devaluation was inevitable. FWIW.

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