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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (45912)	2/5/1999 4:52:00 PM
From: Merritt	Read Replies (1) \| Respond to of 132070

CB: I do mostly ignore him. As to your MB question: nope, no definitive answer except to say it seemed to me to be a result of several things...interest rates being paramount, but the causes of the changes were diverse...balance of payments, deficit spending, natural resource price fluctuations, etc. Liberals like to blame Reagan for running up the deficit, but Reagan made a strategic decision to enter into massive defense spending, which resulted in the Soviets falling massively behind in military parity, even though they ruined their economy trying to keep up. Reagan had enough power to get his defense budget passed, but not enough power to do it without giving a sop to Cerberus (the Democrats huge "entitlements" budgetary items). Now the "dogs" want to put all the blame on Reagan.

To: Ilaine who wrote (45912)	2/5/1999 4:59:00 PM
From: Defrocked	Read Replies (2) \| Respond to 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.