Toward a New Form of Money?

SINCE 1973, WHEN FLOATING exchange rates first became the new orthodoxy, two schools of economic thought have been arguing with each other.

One, the majority, believes floating exchange rates are necessary and permanently desirable. This school would consider any return to fixed rates potentially catastrophic because of the periodic crises that seem to build up when governments are charged with adjusting the rates.

The other school, today in the minority, believes that floating exchange rates only encourage fiscal irresponsibility and inflation. It argues for a return to fixed rates as a means of ...

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