Commentary

Letters to the Editor: Friedman’s Position on Fixed Exchange Rates

This article appeared in the Financial Times on January 16, 2007.

A letter to the editor of the Financial Times from Professor Steve H. Hanke.

Sir, In his response to Benn Steil (January 5), Thomas Willett (Letters, January 11) correctly concludes that Milton Friedman’s scholarly work “led to the sharp swing in professional opinion toward floating exchange rates”. But Prof Willett implies that Milton Friedman opposed fixed exchange rates and dollarisation. Friedman’s positions on exchange rates are clear: for major currencies, central banking and flexible exchange rates; as for developing countries, he opposed central banking and advocated either currency boards (fixed exchange rates) or dollarisation.

Steve H. Hanke is a Professor of Applied Economics at the Johns Hopkins University. He is a well-known currency and commodity trader and reformer who presided over the world’s best-performing emerging market mutual fund in 1995.