Posted on 01/22/2007 6:26:09 PM PST by RWR8189
In July last year, the late Milton Friedman, Nobel laureate in economics in 1976, granted an interview to The Wall Street Journal. Today we publish material from a question-and-answer exchange he had by email--shortly after their meeting--with his interviewer, Tunku Varadarajan, the Journal's editorial features editor.
Should China float the yuan?
Milton Friedman: Yes. Pegging the Chinese currency to the U.S. dollar requires that China follow a policy which over time yields an inflation rate that is compatible with, though not necessarily equal to, the U.S. inflation rate. When that is not the case, maintaining the peg will require control over foreign exchange transactions both current and capital. But China's future depends on their eliminating such exchange controls, on their opening the market as much as they can and as having essentially a free price system. Hence it is in their own interest to move to institutions which enable them to have as free a market as possible both internally and externally.
If they do insist on pegging the yuan, they will sooner or later run into a situation in which they are either accumulating an excessive amount of U.S. dollars or they are in debt for an excessive amount of U.S. dollars and they will have a foreign exchange crisis. Far better to have a floating exchange rate and let the market do the adjusting that is necessary to render developments in China economically compatible with those in the rest of the world.
(Excerpt) Read more at opinionjournal.com ...
Friedman: Islamofascism, with terrorism as its weapon.
A very wise man.
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Bump!
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God rest this dear man's soul. Where is there another brilliant, wise and well rounded, gentle man like Milton Friedman? He has gone to join other unmatchables, like Winston Churchill and Everett Dirksen.
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