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"The dollar has long been the wild card in the economic outlook. Its surprising strength in the 1990's helped keep inflation in check by reducing import prices. A high dollar also attracted hundreds of billions of dollars in investment to compensate for the low savings rate among Americans. And while the dollar rose more than 40 percent since 1995, the gross domestic product kept growing strongly, anyway. The high dollar greatly raised world prices for the nation's manufacturing exports, but record trade deficits only partly offset other fast- growing components of G.D.P."
"This pattern, however, has long been too good to stay true. As the expansion shows signs of weakness, it is time to encourage a modest decline in the dollar to stoke manufacturing sales, which have been hit hard by the high dollar."
"It is also time to recognize the serious imbalances the strong dollar has created. The United States owes trillions of dollars of debt it took on to finance current account deficits. As important, the high dollar has done longer-term damage to some industries by discouraging investment in globally competitive goods."
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