MACRO, MONEY, CREDIT AND INVESTMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00109R000100050021-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 20, 2016
• Document Release Date: July 12, 2007
• Sequence Number: 21
• Publication Date: June 8, 1982
• Content Type: MEMO

Approved For Release 2007/07/12 : CIA-RDP84T00109R000100050021-3 CM-234
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THE UNDER SECRETARY OF THE TREASURY
FOR MONETARY AFFAIRS
June 8, 1982
MEMORANDUM FOR THE CABINET COUNCIL ON ECONOMIC AFFAIRS
From: Beryl W. Sprinkel
Subject: Macro, Money, Credit and Investment
Despite complaints about high interest rates and volatile
exchange rates, we achieved most Summit objectives in the
macro, money, credit and investment areas.
1. The Declaration indicated growth and employment must
be increased but is more attainable if we contain inflation.
Advantages to U.S.
Renews pledge to avoid short-run reflationary policies
which have caused serious inflation in the past. Present French
policies appear to be in conflict with pledge.
2. The Declaration also stated that in order to achieve
lower real interest rates, we must pursue prudent monetary
policies and achieve greater control of budgetary deficits.
Advantages to U.S.
Avoids pressures to revert to an easier money policy
while keeping pressure on our efforts to achieve budgetary control.
3. Included in the Declaration was the Statement of
International Monetary Understanding which was a direct result
of a U.S. initiative.
Advantages to U.S.
a. Focuses international attention on convergence
of basic policies needed for achieving low interest
rates and exchange rate stability.
b. Reduces pressure for attE.cking symptoms --
intervention in money and exchange markets.
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c. Provides U.S. a forum for critically evaluating
G-5 policies.
d. Responsive to European concerns about inadequate
cooperation.
4. There was agreement among Summit partners to initiate
a study of exchange rate intervention as the U.S. proposed.
Advantages to U.S.
a. Responsive to European concerns about exchange
rate volatility without committing U.S. to
intervention.
b. Provides learning experience for dedicated
interveners.
5. Summit partners agreed to handle cautiously financial
relations with the USSR and other Eastern European countries,
in such a way as to ensure that they are conducted on a sound
economic basis, including also the need for commercial prudence
in limiting export credits.
Advantages to U.S.
For first time achieved a "limiting" clause with
respect to credit granted USSR and other Eastern
European countries.
Disadvantages to U.S.
a. Subject to interpretation and not precise.
b. Have not yet achieved agreement on OECD concensus
which raises rates and reclassifies many countries,
including USSR and many newly industrialized
countries, in limiting official export credits.
6. We achieved a strong statement endorsing the encourage-
ment of private capital flows, including "international arrange-
ments for private investments."
Advantages to U.S.
Provides impetus to our present efforts in OECD and
planned efforts at the GATT Ministerial to ultimately achieve
internationally agreed ground rules for the treatment of
private investments.
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