ABSTRACT
Ambiguity and confusion abound over the international payments position. President Johnson's balance-of-payments message, for example, devotes the first half to stating how strong the dollar is, and the second to proposals for correcting its weaknesses. Economists have been using the term “crisis” to describe the situation for at least six years, during which world trade has expanded virtually continuously. The balance of payments of the United States is puzzlingly in continuous massive deficit, but the foreign-exchange market for the dollar, with sporadic speculative exceptions, evinces no particular sign of weakness. The French, and to a lesser extent the European Economic Community as a whole, express irritation over both the duration and extent of the deficit, and the strength of American corporations, banks and other financial institutions. German opinion is unclear whether capital is scarce or abundant in that country, and whether, accordingly, the long-run normal capital flow should be outward to finance long-term foreign investment, or inward to finance the still large backlog of housing demand.
