Re: Fix the Yen

[wfhummel@xxxxxxxxxxxx (William F. Hummel)]

Basil,

Wayne Angell was not proposing that the Fed cooperate in any such
peg.  He proposed that the BOJ expand its balance sheet as
required to peg the yen to the dollar.  Theoretically that is
possible, but at what cost?  Central banks have attempted to
stabilize an exchange rate on various occasions, but no major CB
has ever announced a fixed exchange rate policy by such
unilateral action.  Frankly, I don't think it is practicable.
The idea behind Angell's proposal is to promote confidence in the
yen-dollar peg so that Japanese savers would be willing to invest
freely in foreign markets and spending at home.

William

>William
>If the Fed and the Bank of Japan both agree to peg the rate, they can
>continue to hold it indefinitely, since they each have an unlimited
>supply of their own currency.
>Basil