To Finance This Trade Deficit, The U.s.

The Price Of Imported Oil In The Us Doubled Between Summer 2003 And Summer 2005, Reducing Consumers' Purchasing Power By More Than 1 Per Cent Of Gross Domestic Product.

But Then In April Of 1985 The Dollar Began A Sharp Decline. The Dollar's Trade Weighted Value Fell 23 Percent In Just 12 Months And By A Total Of 37 Percent By The Beginning Of 1988.

The Good News Is That A Competitive Dollar In The Global Market And A Strong Dollar At Home Are Compatible In Both The Long Run And During The Transition To A More Competitive Dollar.

We Pay Some Price When Necessary To Bring Down Inflation But That Price Is Temporary And Is Not Large Relative To The Permanent Gain From Reduced Inflation.

In Short, Both Experience And Economic Theory Imply That The Us Could Now T To A More Competitive Dollar Without Experiencing Either Increased Inflation Or Decreased Economic Growth.