Economic policies of the industrial nations are on a dangerous course, constituting a threat to worldwide growth and to financial and economic stability. The results of inappropriate policies throughout the industrial countries are (1) financial strains which endanger global economic stability, (2) extraordinary imbalances of trade, and (3) persistent budget imbalances. Two major effects of imbalances in currencies are the loss of U.S. jobs at an accelerating rate due to declines in the U.S. manufacturing sector and inflation. Although the rise in the dollar has helped reduce inflation in the United States, the current vulnerability of the dollar to a major correction creates serious concern about the course of inflation during the next few years. A final implication of misaligned exchange values involves interest rates. Even though the inflow of foreign capital has reduced interest rates in the United States, when foreign capital flows out in response to concern about weakening of the dollar, volatile increases in interest could result. Much greater coordination of economic policies is required on a worldwide basis. Economic stability cannot be achieved individually; only with a set of policies which are consistent around the world can financial and economic conditions be stabilized. (LH)