The second method is to take a figure close to where the floating currency is presently trading.
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Yet now interest rates have gone even higher (this week the central bank raised the overnight rate from just under 30% to 32%), in order to stop the floating currency from sinking out of sight.
The floating currency era began.
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On the bright side, as the Keynesian floating currency experiment fails a little more each year, the pace of new understanding has improved considerably.
The characteristic crisis of the post-1971 floating currency era is the crisis of unstable currencies.
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But the biggest problem with a floating currency remains the risk of volatility.
The RMB is not a free floating currency like the Brazilian real or the euro, but the beauty behind buying the Chinese currency is that the government has said that it will appreciate the currency each year.
The yuan, also known as the renmimbi, is not a free-floating currency so the market does not determine its value.
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During that time, a member of the capitalist class, Andrew Carnegie, argued the opposite: that, in fact, a sound currency was the friend of the common man, while a floating currency often gave speculators and financial sophisticates an unfair advantage.
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There was a Panic in 1873, which happened while the dollar was a floating currency, before it was relinked to gold in 1879.
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The problem is that free-floating currencies help currency traders but undercut the ability of other businesses to plan their investments.
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This exchange rate liberalization has continued and while the ruble is not a freely floating currency, it is much closer to being one that it was in the past.
Not surprisingly, when Ecuador announced that it was floating the sucre, the currency spiraled down like a deflated balloon -- just as had happened with the Asian currencies.
That is particularly true of Poland, which is bigger than all the other new member states combined, and the only one with a free-floating currency.
But Mexico is alone among the big Latin economies in having a freely floating currency, which gives it more policy flexibility.
Europe was dogged by currency instability from the introduction of floating rates in the early 1970s to the creation of the euro in 1999.
Indeed, if Mexico, the only other big Latin American economy with a floating currency, is any guide, interest rates may well stay high.
What alternatives are there to the present situation, of a Federal Reserve monopoly floating fiat currency?
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Automakers believe currency exchange rates should be established in the floating market, not by government intervention.
By devaluing a currency in a floating exchange rate environment, the result is that trade booms and foreign reserves balloon.
The reason we have floating currencies today is to enable economic management via currency manipulation.
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Moreover, abandoning the gold standard in favor of free floating currencies was supposed to eliminate currency crises and lead to an automatic adjustment in trade imbalances.
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This does not include those countries which, like Russia, seemingly have a floating currency, but one which, in practice, the government tries to keep within a close band with major currencies.
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The adoption of the euro, disconnected from the economies of southern Europe, shows just how damaging a non-floating currency can be.
Back in the world of floating exchange rates, countries wishing to have a trading advantage can manipulate their currency to be low and thereby have ultra-competitive prices for export goods.
One problem is that the block's two largest members have such different currency regimes: Brazil's floating (or sinking) real has lost over 40% of its value since its forced devaluation in 1999, whereas Argentina's peso is pegged to the dollar.
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