Price fixing internationally

Date: 13 Feb 15
By: Frank Gue, B.Sc., MBA, P.Eng.,
2252 Joyce St.,
Burlington, ON L7R 2B5
905 634 9538
For: Editors, The Economist,
London, UK
Re: “A peg in a poke”, Jan 31 edition 161 words

Dear Editors:

So, “ … currency pegs may eliminate volatility in the short term, but at the cost of a very big currency move if the peg gives way.”

There is no “if” about it. A currency peg is price fixing, of which big centralized administrations, particularly socialist governments, are historically fond and which historically fail.

Ironically, many governments, while stoutly proclaiming democratic purposes, often select bad means to good ends. Fixed exchange rates, like fixed interest rates, are among the worst of these. As Maggie Thatcher’s Chancellor of the Exchequer, Nigel Lawson, remarked to me on his visit to Canada, “Fixed exchange rates? They can be very useful except under unusual circumstances. Unfortunately we usually had unusual circumstances.”

Cheers,

Frank Gue

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