Fixed Exchange Rates Will Not Work Op-Ed

This does not mean nothing can be done. Clearly, with the world facing disturbingly volatile currency and interest rates, something is wrong somewhere. The dollar's value in West German marks and yen has varied by at least 33 and 32 percent, respectively, over the past 12 months. America is run...

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Bibliographic Details
Published inThe New York times
Main Authors Johnson, Thomas S, Thomas S. Johnson is president of Chemical Bank
Format Newspaper Article
LanguageEnglish
Published New York, N.Y New York Times Company 20.02.1986
EditionLate Edition (East Coast)
Subjects
CURRENCY
JOHNSON, THOMAS S (CHEMICAL BANK)
REAGAN, RONALD WILSON (PRES)
STATE OF THE UNION MESSAGE (US)
UNITED STATES
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Summary:This does not mean nothing can be done. Clearly, with the world facing disturbingly volatile currency and interest rates, something is wrong somewhere. The dollar's value in West German marks and yen has varied by at least 33 and 32 percent, respectively, over the past 12 months. America is running a record trade deficit of nearly $150 billion per year. Industrial nations' unemployment is persistently high. Growth of this country's gross national product is low, as is G.N.P. growth in most other industrialized countries. Are exchange rates at fault? No. Blaming rates, and ''fixing'' them, is like blaming the messenger for bad news and shooting him. A fixed rate system would be an inappropriate response to a problem that goes far deeper than volatile rates: Exchange rates move with economic forces and investors' psychology; fluctuating rates reflect underlying instability in the global economy.
ISSN:0362-4331