The World Economy is Our Common Fate: Helmut Schmidt in Fortune, 27 July 1982

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AbstractIn this article for Fortune (27 July 1982) Schmidt lists the causes of the crisis in the world economy since the start of the 1970s. These included the international financing of the Vietnam war, the emergence and rise of the Eurodollar market, the end of the dollar as the central anchor of the world currency system, and the policy of public debt pursued by many states. The global impact of the first explosion in oil prices had become possible following inflation in the oil-consuming countries. Despite the advantages the oil-producing countries had gained through the second wave of oil price increases, the knock-on effects of this process had not left them unaffected. This was equally true for the Communist states, including the Soviet Union, whose economy relied by that time on Western imports. In this situation, where neither an extreme policy of austerity nor increasing public debts could help, only close cooperation between the major industrial countries and the oil-producing countries could offer a way out of the cycle of crises. Because of the huge American share of the world economy and the importance of the market in Eurodollars that made the national credit policies of other states an illusion, their economy depends to a significant extent on the US policy of high interest rates. The other industrialized countries have therefore not lost their responsibility for evening out the balance of payments. As well as the European Currency System, with its important function in the region, it is also the responsibility of other international institutions (IMF, World Bank, OECD, GATT) to help in this worsening situation affecting a number of developing countries. In general, this article is a last Ceterum censeo on the economic and currency policy of Schmidt as Chancellor. Two months later he had lost his majority in the Bundestag through the change of coalition alliance by his liberal partners.KeywordsInterest RateMonetary PolicyWorld EconomyCurrent AccountPublic DebtThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.