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It will have to be remarkably deft in draining the system of excess dollars in a timely way.
The excess dollars fill up in foreign central banks, leaving those countries with a difficult choice: reinvesting the dollars in United States securities or holding them and facing an increase in the value of their own currencies, making their products less competitive in world markets.
Here's what Paulson and Federal Reserve Chairman Ben Bernanke should do: Soak up the excess dollars.
However, it deserves to maintain its status as an excellent diversification currency for those who hold excess dollars.
The Federal Reserve, of course, must do its anti-inflationary part by removing excess dollars from the economy.
To the extent that foreign entities can exchange their excess dollars for things of value i.e., raw materials, energy, military might, technological knowledge and real estate they will.
Similar(49)
Growth is not the cause; excess dollar creation is.
Each excess dollar we spend is profit for an insurance company, hospital, testing facility, pharmaceutical company, biotechnology company, or other player in the healthcare industry.
The stock of U.S. external liabilities — reflecting the excess of dollars going out of the U.S. over dollars flowing in — will rise from an already high 13.5% of GDP in 1997 to over 19% by the end of 1999.
Aides to Mr. Thune said they were not surprised that the Johnson campaign was so quick to politicize the drought and said Mr. Thune had helped draft an aid package in the House that uses excess farm dollars and won't bust the budget.
And the call for some magical solution to the problem of China's excess of dollars suggests something else: that China's leaders haven't come to grips with the fact that the rules of the game have changed in a fundamental way.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com