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But you don't want to devalue from one fixed peg to another. You want to defend an upper bound to the read exchange rate, and then use accumulated hard currency reserves to act in a discretionary manner to defend your national economic interest against speculative hot money.

Oh, and you want to withdraw rediscount facilities from all banks that assist in speculative attacks against your currency. You can't attack a currency unless you can short it, and you can't short it unless its central bank is being a sucker.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 12th, 2011 at 05:56:46 PM EST
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