105. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter1


  • The Dollar

Secretary Blumenthal and Chairman Schultze are worried that persistent flabbiness of the dollar could provoke unfair trade practices, lead to competitive devaluation of currencies, make international economic cooperation more difficult, and undermine U.S. foreign policy.

In a recent memorandum to you (at Tab A)2 Secretary Blumenthal and Chairman Schultze examined macroeconomic, monetary, and trade options open to us in meeting contingencies with respect to the dollar. Wishing to avoid being forced to consider some of the more extreme measures, mentioned in this memorandum, they think that an Administration wide effort should be put in motion to assess the extent of the problem in 1978 and beyond. In view of the importance of oil imports in the current account deficit, this assessment would be based on an up-to-date estimate of future U.S. oil imports. The exchange rate implications of alternative current account developments would also be examined.

Henry Owen and I share their concern and agree with their prescription. In our judgment, your endorsement is needed to ensure that the agencies involved assign a high priority to this effort and devote sufficient resources to it. We recommend that you approve my sending the memorandum attached at Tab B.3

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 8, Balance of Payments: 12/77–2/79. Confidential. Sent for action. A stamped notation reads: “The President has seen.” Schultze, Solomon, Cooper, Robert Ginsburg, and Edward Randy Jayne (OMB) all cleared the memorandum. (Memorandum from Dodson to Hutcheson, February 14; ibid.)
  2. Printed as Document 98.
  3. Printed as Document 106. Carter indicated his approval and initialed “J.”