Word: systemization
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Dates: during 1960-1969
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...opinion consider controls undesirable, unworkable, unfair, even immoral. Conservative Milton Friedman has condemned them, and so has Paul McCracken, head of Nixon's Council of Economic Advisers. Another former CEA chief, Walter Heller, adds: "Trying to substitute Government omniscience for the brilliant cybernetics of the private market system would invite too many distortions, too many evasions." The public, however, is so fed up with inflation and so sick of the surtax that it favors wageprice controls-by a 47%-to-41% margin, according to the latest Gallup Poll. It has apparently forgotten the black markets and the gray markets...
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...
...this system were already in effect, the disparity between the undervalued Deutsche Mark and the overvalued French franc, the most chronic source of monetary crisis, might well be reduced. The mark probably would have moved up in several steps from its present value of 25?, to 26? or 27?, and the franc would have gradually declined from 20? to around 18? or 19?. The Dutch guilder and Italian lira probably would have moved up too, while the British pound almost certainly would be worth less than its present $2.40. The U.S. dollar would not have changed because...
...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. It would thus discourage currency speculation because the gains that could be achieved from parity changes...
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...