Misconceptions About the Floating Exchange Rate System and the Crisis in the French Market
- 1The floating exchange rate system has been a primary driver of all credit cycle surges and financial crises during periods of financial instability and credit cycles over the past 40 years.
- 2French policymakers and investors believed the falsehood that a decline in the value of the dollar would solve all problems.
- 3The French stock market (CAC 40) declined significantly.
So what's the key point?
A system where exchange rates move freely has been a major cause of financial crises. French investors believed that a drop in the value of the dollar would solve everything, but the French stock market fell sharply.
Source Capital Flows · View original ↗
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