ABSTRACT
In what turned out to be arguably his most influential economic tract, The Case for Flexible Exchange Rates, Milton Friedman pronounced already in 1950 that ‘a system of flexible or floating exchange rates [is] . . . absolutely essential for the fulfilment of our basic economic objective: the achievement and maintenance of a free and prosperous world community engaging in unrestricted multilateral trade.’ He expressed the opinion that ‘liberalization of trade, . . . harmonization of internal monetary and fiscal policies’ and, be it noted in first place, ‘promotion of rearmament’ (no anti-armament man he, in contrast to Adam Smith) ‘become far easier to solve in a world of flexible exchange rates and its corollary, free convertibility of currencies’.1
