I have been teaching about foreign exchange for more than a dozen years now and thinking about money and trade for even longer. At the University of Chicago, on my way to a Ph.D. in economics, I enrolled in the 1980s in an international trade course (“with money”—as opposed to “real” trade) with Jacob Frenkel [who, from 1991 through 2000, was governor of the Bank of Israel (i.e., Israel’s counterpart to Alan Greenspan/Ben Bernanke) and who subsequently served as president of the international division of an investment bank and then chairman and CEO of the Group of Thirty (G-30)]. The University of Chicago is proud of its role in instituting the “quarter system” (the summer being one of the “quarters”—that is, in establishing what most people would call the trimester system in which three 10-week sessions constitute the academic year). Mr. Frenkel distributed what seemed to me like a particularly thick syllabus for a 10-week term. Chicago graduate students in the Department of Economics were required to take courses in a relatively large number of different fields. International trade was not one of my areas of specialization, so I stopped by Mr. Frenkel’s office to ask if he could tell me which were the more important papers. His succinct response: “Zey are oll important!” While I was reading the material, some of the journal articles seemed to refer to the exchange rate as, say, Dollars per Pound, while others appeared to take the exchange rate to indicate Pounds per ...

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