Lämplig engelsk läsövning för den ärevördige MEP:en:"jonliveseyToday 03:17 AMThere is plenty of empirical evidence that movements in a national exchange rate will produce economic recoveries if they are allowed to do their work and you do not peg to someone elses currency. In the late 20s the UK was on the Gold standard at too high a rate, and the economy stagnated. From a production base of 100 in 1929 it drifted down to about 80 in 1931, and then the UK left the Gold Standard and devalued by about 25% and as a result the economy took off and recovered to a level of around 125 by 1937. In this period 1929-37 the UK actually grew faster than Germany, which sheds an odd light on the claim that the dictators made the trains run on time. By contrast, France remained pegged to Gold and continued to stagnate, with production remaining below 75 as late as 1937 - one of the reasons for their later defeat.When Maggie took over in 1979 she inherited a very sick economy where Government spending levels of 60% of GDP had more or less bankrupted the country, and she broke the peg with the Dollar, and floated Sterling which proceeded to drift down to $1.10, after which the UK entered a period of growth and Sterling gradually rose to around $1.50. Major did the reverse. He inherited a pretty healthy economy, but by pegging Sterling to the DMark, he allowed the rate to be forced up to $2.00, which was unsustainable. It was at that point that the ERM shattered and almost all member currencies either devalued or left the system. You would think people would have learned something from the ERM business - such as "currency pegs don't work in the long run" - but they don't.Fortunately, after a couple of days of trying, Major chose to leave the ERM rather than defend the peg against the Dmark and so he let the market take Sterling down, with the result the economy entered a growth period that lasted until two years ago. And then once again Sterling gradually drifted upwards until it had more or less erased its previous losses. What's more, UK GDP per head consistently grew faster than the EU average during this period, with lower unemployment.To me, this is either a series of weird coincidences, or it is evidence that having a national currency whose rate is determined by the market means that it will go up and down, and that going up and down allows your economy to ride out storms. If you refuse to let the market take your currency down, you stagnate, like France in the thirties, and if you peg to someone else's currency you stagnate until you can't stand it any longer, after which the peg shatters anyway, and then you recover despite your own best efforts.For what it's worth, I also think that having a low unemployment rate and a growing economy is worth a lot more in the end than having one abstract exchange rate number to boast about. Currency machismo is very costly."