Theories Abound On `Conspiracy' To Aid Dollar
As the dollar has risen over the past month, speculation has been mounting that Bush's presidential campaign is the intended beneficiary of a joint effort by U.S., Japanese and European officials to inject the American economy with a quick fix of foreign money. In Washington, on Wall Street and in overseas capitals, conspiracy theories are flying thick and fast.</br></br>Yesterday, for example, Charles Lieberman, a senior economist at Manufacturers Hanover Trust Co., sent a memo to financial-market traders at the big New York bank describing an "unholy alliance" between the U.S. Treasury and Japanese officials to buoy the dollar.</br></br>And on The New York Times' op-ed page, in an article entitled "How Bonn, Tokyo Slyly Help Bush," investment banker Jeffrey Garten charged that the governments of West Germany and Japan have decided that "George Bush is their man, and they are propping up the dollar to assure him smooth economic sailing in the campaign." Treasury Secretary James A. Baker III, most commonly cited as the architect of the alleged conspiracy because of his closeness to Bush, wasn't available for comment yesterday. But several weeks ago, when the theories first began circulating, he described the speculation as "ridiculous." He told an NBC News interviewer that foreigners "are interested in promoting dollar stability because it is in their best interest and it is in the best interests of the world economy."</br></br>Other U.S. officials, along with many independent analysts, agree. They note that the recent rise in the dollar appears to be attributable to strong demand for the U.S. currency by private overseas investors, rather than the active intervention of foreign governments. In fact, the West German central bank has been trying especially hard to brake the U.S. currency's ascent in recent days by selling dollars it holds. Moreover, the behavior of the U.S. Federal Reserve, which strongly influences the dollar, hasn't been helpful to Bush; the Fed has driven interest rates up.</br></br>But those arguments haven't quelled the speculation that something suspicious is going on. In testimony before the Senate Banking Committee last week, economist David Hale of Kemper Financial Services Inc. said: "Although no one is yet calling George Bush the Manchurian candidate of 1988, he has been the effective beneficiary of the effort by central banks in Japan, Taiwan and elsewhere to restrain our inflation and interest rates through exchange market intervention."