Showing 7 posts

kevinyeh
Exchange Rates
Apr 28 2008, 10:31 AM EDT | Post edited: Apr 28 2008, 10:31 AM EDT
If pegging the US exchange rate is so beneficial, why don't all countries just try to do that to keep the US dollar strong and keep the global economy booming? 1  out of 1 found this valuable. Do you?    
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timothysun
timothysun
1. RE: Exchange Rates
Apr 28 2008, 11:09 AM EDT | Post edited: Apr 28 2008, 11:09 AM EDT
There's no such thing as true altruism, as you know from AP Psych. In my opinion, there is some cost larger than the benefits of pegging the US exchange rate. No one really gives a damn about the global economy: it's all about themselves. Do you find this valuable?    

kevinhuang
2. RE: Exchange Rates
Apr 29 2008, 5:08 AM EDT | Post edited: Apr 29 2008, 5:08 AM EDT
I agree with Tim. Countries would naturally choose the most beneifical path for them espcially if they are in the process of developing. Countries want to be more powerful in production than others and as a result not all countries want to use the pegging system, which is like the commons. Do you find this valuable?    
mrdaily
mrdaily
3. RE: Exchange Rates
Apr 29 2008, 8:48 AM EDT | Post edited: Apr 29 2008, 8:48 AM EDT
Well, it would also probably also be a major hassle to keep the exchange rate pegged. I mean since the government can not control the demand and supply of other countries in the world, the government must constantly intervene to keep the pegged exchange rate. These constant fluctuations in investment do not help create stable employment. Furthermore, fixed exchanged rates can create controversy among nations like when the RMB was pegged for so long the US was really starting to get annoyed. In free-floating exchange rates there is no required government intervention as the economy will self-adjust over time. Do you find this valuable?    

J.Chiang
4. RE: Exchange Rates
Apr 29 2008, 10:10 AM EDT | Post edited: Apr 29 2008, 10:10 AM EDT
I think that if the market can correct itself, then we should just leave it alone. The pegged system creates a lot of unnecessary work for governments, although of course, sometimes government intervention is needed. Also, free floating systems allow different economies to adjust accordingly. A pegged system reduce the volume of trade and may not always be economically efficient. Do you find this valuable?    

mina.song
5. RE: Exchange Rates
Apr 29 2008, 11:07 AM EDT | Post edited: Apr 29 2008, 11:07 AM EDT
As we learned I think pegged exchange rate do not show real economic system of the country, like china. As Mr. Welker said because China exchange rate is fixed no one knows exact value of yuan right now. And Chinese government (probably) doing so many unnecesary things to fix that exchange rate. Do you find this valuable?    

MondGu
6. RE: Exchange Rates
Apr 29 2008, 1:52 PM EDT | Post edited: Apr 29 2008, 1:52 PM EDT
The pegging system is a high cost system, it imposes unnecessary workload on the government. I agree with tim, the main reason of this is because countries are more concerned with their own development than the global development, Do you find this valuable?