[Nick Danger]

I agree that fixed exchange rates between currencies would eliminate a lot of transaction costs and hedging expenses, but why should we believe that the various world economies are all going to do equally well? And all expand or contract at the same times? History tells us they don't. And if they don't, the exchange rate between their currencies should change to reflect the higher or lower amount of stuff there is to buy with each currency.

A fixed exchange rate between the U.S. Dollar and the Russian Ruble would have been a joke. The U.S. economy was performing much more strongly throughout the entire 20th century. The underlying economic truth was that the Ruble should have been falling against the Dollar almost continuously from 1917 on. Where markets were allowed to operate, that in fact happened. Who is so smart that they know better than the market?

[Torie]

Fixed exchange rates work well until such time as they don't.

[Deuce]

A fixed exchange rate between the U.S. Dollar and the Russian Ruble would have been a joke. The U.S. economy was performing much more strongly throughout the entire 20th century.

Fixede exchange rates in no way require economies to grow at the same rates. In fact they have nothing to do with the performance of economies.

They merely require integrity from each party. The current fiat purveyors have no such integrity. If each monetary unit is defined as, and redeemable for, an explicit quantity of a given substance (gold works), then, by definition, exchange rates are fixed.