Economists now accept exchange-rate intervention can work

Milton friedman, a Nobel-prizewinning economist, was an early fan of floating currencies. The case for flexible exchange rates, he once pointed out, is the same as the argument for daylight-saving time. In theory, people could start their summer days an hour earlier without any change in the clocks. In practice, it is easier to change the time than to change everyone’s habits. By a similar logic, whenever there is a shortfall in demand for a country’s goods and assets, it is easier to let one price, the exchange rate, drop than it is to cut all of a country’s other prices instead.