Dollar Problems Abroad

Archive Report

World Monetary Disorders

Reasons Behind Dollar's Decline in Value

In economic terms, the 1970s are likely to be remembered as the period when the once “almighty” dollar fell on hard times. Its domestic purchasing power is half what it was in 1965; its value in gold is one-fifth what it was just six years ago. Since the end of World War II, non-Communist countries have pegged their economies to the dollar. But in the face of mounting U.S. trade deficits and spiraling inflation, the dollar's role as an international currency is being challenged as never before.

That topic is expected to be high on the agenda at the economic summit meeting next month in Bonn.1 Prior to the Bonn conference, leaders of the European Economic Community (EEC ...

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