Word: pegged
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...plan has the particularly unattractive name of "crawling peg," but it has a notably attractive list of advocates. It was popularized largely by Princeton Economist Fritz Machlup, and lately has been advocated, in one form or another, by German Economics Minister Karl Schiller, French Finance Minister Valery Giscard d'Estaing and Hendrik Houtthaker, a member of the U.S. Council of Economic Advisers. Last week Guido Carli, governor of the Bank of Italy, also offered a crawling-peg plan...
Step by Step. The 25-year-old system that the crawling peg would change is based on fixed exchange rates, under which currencies are valued in relation to the dollar and may range up or down by no more than 1% in foreign-exchange trading. Under the simplest form of crawling peg, if a currency were to sell for some months at the bottom of its 1% range, then its official value would automatically move down. On the other hand, if heavy demand were to make a currency sell persistently at the top of its range, its official value would...
Closer to Reality. There are many varieties of crawling-peg plans. Some would adjust exchange rates annually, some quarterly, some monthly. Other versions would make adjustments optional and not automatic-that is, at the discretion of each government. All advocates agree that it is essential to make the parity changes frequent but small-perhaps 1% to 2% yearly. Sup porters believe that, under such a system, the value of a country's currency would reflect the realities of its balance of payments position and the amount of its inflation. The crawling peg would also avoid sharp devaluations and revaluations...
Opposition is formidable. Common Market officials fear that frequent changes in the value of the Market's six currencies would wreck their system of uniform farm prices. Some German and Swiss bankers argue that the crawling peg would depress international trade and investment by creating uncertainty as to what any currency would be worth in the future. Supporters reply that under the present system, threats of large devaluations or revaluations create even greater uncertainty-and that all too many governments depress trade by imposing controls on the movement of goods and capital in order to preserve unrealistic exchange rates...
...suggests that Pegler's tough-guy cynicism was only a professional pose, wholly out of character with his personal feelings of shyness, insecurity and educational inadequacy. He vented his frustrations at the typewriter. Those who knew him best preferred the private Pegler. "Somebody should take the hide off Peg," wrote Fellow Columnist Heywood Broun when Pegler was on top, "because the stuff inside is so much better than the varnished surface." Pegler's professional hide seemed mainly to toughen as he grew older. When it finally cracked under the pressure of lawsuits and frustration over his advocacy...