> From: "Robert S.Z." <[EMAIL PROTECTED]> > Date: Fri, 27 Jun 2003 09:10:18 -0400 > To: "e-gold Discussion" <[EMAIL PROTECTED]> > Subject: [e-gold-list] Re: recent discussions - need a summary
> It does depend on the type of economy of the country in question. Malaysia > has imposed a Dollar-peg during the Asian crisis and defied Worldbank and > IMF recommendations. Three weeks later the stock market stopped falling. > Then real property sector came back and Malaysia returned to a postive > trade balance. A dollar-peg was the primary cause of the Asian Financial Crisis of 1997, when the rising dollar value caused first a soaring value of the Thai Bhat, which caused the crash which promptly spread to other ASEAN nations like Malaysia, Indonesia, and S. Korea. When the fixed exchange peg finally crumbled, the Bhat lost 40% of its value, the Korean won and the Philippine ringgit had lost half their value versus the dollar, while the Indonesian rupiah had lost 70% of its value. It led to a lot of economic devastation in those countries. I wrote a term paper at the time on the causes of the Asian Financial Crisis. Imposing a dollar peg during the crisis might have worked for Malaysia, but only because they had a floating exchange rate up to that point so they had avoided the situation of their neighbors. And if Malaysia's currency had come under pressure, the central bank can only hold up the peg until they run out of foreign reserves, which is what happened with their neighbors. A fixed exchange rate, while it has some benefits, is overall not a good idea long term, especially for developing countries. The idea of a government, and not the market, setting interest rates, exchange rates, and money supply is folly. It may have some short term benefits at first, but over time will lead to bad consequences on balance worse than if the free market had been allowed to function all along. - John --- http://cambist.net --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
