It is of little wonder to me that the dollar, the erstwhile symbol of world fiscal stability, is losing ground rapidly in comparison (and in competition) with other stable currencies, notably the Japanese yen and the German deutschemark.
From a ratio of about 360-odd yen to the U.S. dollar of just a few years ago, the ratio as of the last report I heard is 92 to 1.What is it, you may ask, that supports the value of any currency? It is confidence in the fiscal responsibility of the government behind it.
As of Nov. 8, the Republicans were voted into majority in both houses of Congress, mainly on a loudly touted "Contract With America." Among many other lofty promises included in that agenda, were a balanced-budget amendment and a loudly promised limit on congressional terms. How can the world maintain confidence in the U.S. government when, instead of hanging tough on the balanced budget, they make a complete turnaround and promise a tax reduction? And to pour salt on a wounded fiscal condition, the tax reduction will be mostly capital gains in favor of the rich, at the expense of those most vulnerable.
The budget deficit was recently reported as being brought under control by the Clinton administration. However, recent reports of government irresponsibility tell us the deficit will increase in the current fiscal year. It goes without saying that with each year of overspending, the deficit of that year must be piled on top of a national debt of $5 trillion. And to add to a threat of renewed inflation, the government must borrow the amount of the deficit in competition with private enterprise, and with this comes the possibility of ever higher interest rates.
Our government is now in the hands of the so-called conservatives who, rather than concentrating on reducing the deficit, are dedicated to favoring the rich with a tax reduction. And with their reluctance to pass their highly vaunted term-limitation amendment and their zeal for re-election in 1996, it is of little wonder.