Chapter II. The World Economy

The world economic scene has changed little since May. Devaluation of the franc, which had seemed likely for more than a year, is now an accomplished fact. Otherwise the scene remains dominated, as it has been throughout 1969, by the widespread expectation of an upward revaluation of the deutschemark after next month's elections in West Germany and by the struggle in the United States to control inflation by monetary means. A forecast of the immediate future of the deutschemark now calls, however, for political rather than economic judgement. Similarly in France much will depend upon the rigour of deflationary measures to be introduced by the government and upon the reactions which they may evoke from the trades unions and their members. In this issue, therefore, we direct our main attention to prospects in the United States, where it is at least reasonably clear what aims the authorities will be pursuing in coming months.