Fixed Versus Flexible Exchange Rates; Mankiw

Yes, you are exactly correct on this. I favor a gold standard, so I’m in the 10%.

Here are some readings in support of fixed not flexible exchange rates:

%E2%80%9CBack to Fixed Exchange Rates%3A Another %E2%80%98New Economic Order.%E2%80%99 Rothbard – Google Search

%E2%80%9CBack to Fixed Exchange Rates%3A Another %E2%80%98New Economic O…

By the way, the exchange rate between dimes and nickels is fixed, not flexible.

another profession for you: economist!

Mankiw is a good clear writer. The first third of the book is somewhat free enterprise. the second third, on market failure, is very bad. the third  is ok

I am surprised by how much I enjoy reading economics!   Mankiw states, clearly, a lot of things I’ve always been aware of at an intuitive level, then takes it one step further.   For example, the “production possibilities” graph is intuitive – if you use more cotton to make sheets and towels, you’ll have less cotton to make dresses –  but then he points out something I hadn’t really thought about – it’s logical that the production possibilities graph would be bow shaped rather than straight line, because if you shift back and forth in the middle, you are shifting the lower skilled and less experienced workers back and forth between towel making and dress making, but if you shift back and forth at one extreme or the other, you are shifting people who are highly skilled and experienced in one of the two fields into jobs where they are less experienced and less skilled. Now that’s quite interesting and I wouldn’t have thought of it on my own!

I don’t know that there’s anything in this chapter for us to argue about, so let me question you a different way.    In Table 2.2, Mankiw lists “Ten Propositions About Which Most Economists Agree.”

Proposition 3 is: “Flexible and floating exchange rates offer an effective international monetary arrangement.”   He says that 90% of all economists agree with this.

This statement, as I understand it, is premised on the existence of fiat currency, with the “flexible and floating exchange rates” having to do with the way one fiat currency is valued vis a vis a different fiat currency.   In short, the 90% of economists who agree with this statement have implicitly rejected a non-fiat standard (such as the gold standard.)


2:44 am on May 6, 2020