Competitive Gloominology vs. Goldilocks

A trip down memory lane...

October 15, 1979
Shrinking Role for U.S. Money

Though the greenback strengthened a bit late last week as the markets anticipated new dollar defense moves, worry remains deep about the future of the monetary system that helped create the world's postwar prosperity. The central problem is the roughly 1 trillion footloose dollars that slosh around banks and currency markets outside the U.S. For many years during the 1950s and 1960s, Europeans complained about a "dollar gap." Greenbacks were the only currency that was accepted everywhere, though there were not enough of them around to finance world trade and development. But the dollar gap has since become a dollar glut. Due to heavy foreign spending, first to pay for the Viet Nam War, more recently for oil imports, the U.S. has exported enough dollars in the past decade to boost the reserves held by foreign central banks from $24 billion to $300 billion. Private international banks hold another $600 billion in Eurodollars, which are dollars loaned abroad.

Heavy foreign spending (Wal-Mart)? Paying for a war (Iraq)? Oil imports? $300 billion though? Those were the days. We've already burned through half that much with the tax rebate checks alone. We didn't even break a sweat.

Reported TIME Correspondent Friedel Ungeheuer: "An undercurrent of fear and confusion about what has been happening on the money markets ran through the corridors of the modern Sava Center, where the I.M.F. sessions were held. Cecil de Strycker, governor of Belgium's central bank, confided: 'The only thing that is certain is that nothing is certain any more.' Many delegates joined in what Britain's Chancellor of the Exchequer, Sir Geoffrey Howe, aptly described as a kind of 'competitive gloominology.' "

Competitive gloominology for the win!