Magazine article American Banker

Wriston: Dollar's Fall Is a Message

Magazine article American Banker

Wriston: Dollar's Fall Is a Message

Article excerpt

NEW YORK -- The weakness of the U.S. dollar is a sign that the world has voted and found U.S. economic policy wanting, former Citicorp chairman Walter Wriston said in an interview.

"In the collective world judgment," he said, "we haven't gotten our act together with an economic policy that makes a lot of sense to a lot of people."

Mr. Wriston is promoting his new book, "The Twilight of Sovereignty," which says technology will no longer let governments act without restraint from outside forces - in this case, currency markets.

Technology has created "a global plebiscite" or "an information standard," he said, in which the wide and immediate availability of news lets people and markets react simultaneously to a country's policies.

Conditions for Devaluation

A country's currency will be devalued if it "prints money and retreats into protectionism," Mr. Wriston said.

"Clearly, [the United States] has to have a fiscal policy where we don't increase spending every year by two times the rate of inflation," Mr. Wriston said. "We need a tax policy that fosters entrepreneurs, which is where jobs are created."

"We need a monetary policy that funds economic growth without inflation, foreign policies that attract capital, and regulatory policies that are good for business," he added. "Monetary aggregates should be growing at 3% to 4% a year. Lately, they have not been. It is clear that monetary policy should be steady, not turned on and off. …

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