--- title: "Meaning & Key Takeaway of: The problem is that, in a world of…" description: "\"The problem is that, in a world of floating exchange rates, as Italy was before the euro, if one country is subjected to a shock which requires it to c..." image: "https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png" --- # The problem is that, in a world of floating exchange… ![“The problem is that, in a world of floating exchange rates, as Italy was before the euro, if one country is subjected to a shock which requires it to cut wages, it cannot do so with a modern kind of control and regulation system. It is much easier to do it by letting the exchange rate change. Only…” quote by Milton Friedman](https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png) [Download](https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png) [Open image](https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png) > “The problem is that, in a world of floating exchange rates, as Italy was before the euro, if one country is subjected to a shock which requires it to cut wages, it cannot do so with a modern kind of control and regulation system. It is much easier to do it by letting the exchange rate change. Only one price has to change, instead of many.” [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Countries with floating exchange rates can adjust via currency value rather than wage cuts, simplifying shock response. **In simple terms:** Floating rates let economies adjust without wage cuts. Key Takeaway Use exchange flexibility for shocks. Themes economics exchange rates policy flexibility shocks Mood analytical cautious Type economic policy When to use this quote - central bank decisions - fiscal crises - currency speculation - labor negotiations Key Concepts monetary policy inflation control trade balance Questions to Reflect On - What are the social costs of currency devaluation? - How does exchange flexibility affect long‑term growth? A Different Perspective May cause inflation or import price spikes. ★ ★ ★ ★ ★ No ratings yet [Change](https://sms4smile.com/quotes/about/change/) [Country](https://sms4smile.com/quotes/about/country/) [Problem](https://sms4smile.com/quotes/about/problem/) [Regulation](https://sms4smile.com/quotes/about/regulation/) [Shock](https://sms4smile.com/quotes/about/shock/) [Wages](https://sms4smile.com/quotes/about/wages/) [World](https://sms4smile.com/quotes/about/world/) ## Related quotes > [There are so many currency exchange rate problems that people are buying gold as a safe haven. Right now, gold looks like a safe…](https://sms4smile.com/quotes/michael-hudson/there-are-so-many-currency-exchange-rate-problems-that-people-are/) [Michael Hudson](https://sms4smile.com/quotes/author/michael-hudson/) > [When financial sectors are small and capital is mobile, floating exchange rates spell massive currency volatility. When a lot of foreign capital flows in,…](https://sms4smile.com/quotes/zanny-minton-beddoes/when-financial-sectors-are-small-and-capital-is-mobile-floating/) [Zanny Minton Beddoes](https://sms4smile.com/quotes/author/zanny-minton-beddoes/) > [Let's start with the euro. What on earth were we thinking? How could anyone with the faintest grasp of economics have believed it was…](https://sms4smile.com/quotes/mehdi-hasan/let-s-start-with-the-euro-what-on-earth-were-we-thinking-how-could/) [Mehdi Hasan](https://sms4smile.com/quotes/author/mehdi-hasan/) > [The exchange rate of the Rand against the dollar, pound or euro makes South Africa an attractive location. The positive side of this is…](https://sms4smile.com/quotes/john-kani/the-exchange-rate-of-the-rand-against-the-dollar-pound-or-euro-makes/) [John Kani](https://sms4smile.com/quotes/author/john-kani/) > [The lesson for Asia is; if you have a central bank, have a floating exchange rate; if you want to have a fixed exchange…](https://sms4smile.com/quotes/milton-friedman/the-lesson-for-asia-is-if-you-have-a-central-bank-have-a-floating/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [If a country is an attractive place for foreigners to invest their funds, then that country will have a relatively high exchange rate. If…](https://sms4smile.com/quotes/milton-friedman/if-a-country-is-an-attractive-place-for-foreigners-to-invest-their/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [“I doubt you will enjoy it. But that is the price of change. Someone always pays.”](https://sms4smile.com/quotes/jeff-vandermeer/i-doubt-you-will-enjoy-it-but-that-is-the-price-of-change-someone/) [Jeff VanderMeer](https://sms4smile.com/quotes/author/jeff-vandermeer/) > [The price of doing the same old thing is far higher than the price of change.](https://sms4smile.com/quotes/william-j-clinton/the-price-of-doing-the-same-old-thing-is-far-higher-than-the-price-of/) [William J. Clinton](https://sms4smile.com/quotes/author/william-j-clinton/) > [Jesus paid the price. You get to keep the change!](https://sms4smile.com/quotes/nishan-panwar/jesus-paid-the-price-you-get-to-keep-the-change/) [Nishan Panwar](https://sms4smile.com/quotes/author/nishan-panwar/) > [With less competition, corporations can use their power to raise prices, limit choice for consumers, cut wages for workers, crowd out start-ups and small…](https://sms4smile.com/quotes/hillary-clinton/with-less-competition-corporations-can-use-their-power-to-raise/) [Hillary Clinton](https://sms4smile.com/quotes/author/hillary-clinton/) > [Firms are not always willing to cut wages, even if there are people lined up outside the gates to work. So why don't they?](https://sms4smile.com/quotes/janet-yellen/firms-are-not-always-willing-to-cut-wages-even-if-there-are-people/) [Janet Yellen](https://sms4smile.com/quotes/author/janet-yellen/) > [The administration is using the devastation of Hurricane Katrina to cut the wages of people desperately trying to rebuild their lives and their communities.](https://sms4smile.com/quotes/george-miller/the-administration-is-using-the-devastation-of-hurricane-katrina-to/) [George Miller](https://sms4smile.com/quotes/author/george-miller/) > [It were depression, too. They cut my wages down once at the foundry. They cut my wages down again. Then they cut my wages…](https://sms4smile.com/quotes/langston-hughes/it-were-depression-too-they-cut-my-wages-down-once-at-the-foundry/) [Langston Hughes](https://sms4smile.com/quotes/author/langston-hughes/) > [The rate of change is not going to slow down anytime soon. If anything, competition in most industries will probably speed up even more…](https://sms4smile.com/quotes/john-p-kotter/the-rate-of-change-is-not-going-to-slow-down-anytime-soon-if-anything/) [John P. Kotter](https://sms4smile.com/quotes/author/john-p-kotter/) > [When the rate of change outside is more than what is inside, be sure that the end is near.](https://sms4smile.com/quotes/azim-premji/when-the-rate-of-change-outside-is-more-than-what-is-inside-be-sure/) [Azim Premji](https://sms4smile.com/quotes/author/azim-premji/) ## More by Milton Friedman > [The government solution to a problem is usually as bad as the problem.](https://sms4smile.com/quotes/milton-friedman/the-government-solution-to-a-problem-is-usually-as-bad-as-the-problem/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [I believe the role that people like myself have played in the transformation of public opinion has been by persistently presenting a different point…](https://sms4smile.com/quotes/milton-friedman/i-believe-the-role-that-people-like-myself-have-played-in-the/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [To really understand something you've got to reduce it to its principles.](https://sms4smile.com/quotes/milton-friedman/to-really-understand-something-you-ve-got-to-reduce-it-to-its/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [It is a mark of how far we have gone on the road to serfdom that government allocation and rationing of oil is the…](https://sms4smile.com/quotes/milton-friedman/it-is-a-mark-of-how-far-we-have-gone-on-the-road-to-serfdom-that/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [Economic freedom is an essential requisite for political freedom. By enabling people to cooperate with one another without coercion or central direction, it reduces…](https://sms4smile.com/quotes/milton-friedman/economic-freedom-is-an-essential-requisite-for-political-freedom-by/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [“The people in one district can choose not to reelect their member of Congress, but that will not change the composition of the government…](https://sms4smile.com/quotes/milton-friedman/the-people-in-one-district-can-choose-not-to-reelect-their-member-of/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [When you have a time of crisis what happens depends on what ideas are floating around, and what ideas have been developed, and thought…](https://sms4smile.com/quotes/milton-friedman/when-you-have-a-time-of-crisis-what-happens-depends-on-what-ideas-are/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [The government doesn't have any money. The only power it has is to take from some and give to others.](https://sms4smile.com/quotes/milton-friedman/the-government-doesn-t-have-any-money-the-only-power-it-has-is-to/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [What would the people who sold us goods do with the money? They'd get dollars. What would they do with the dollars? Eat them?!](https://sms4smile.com/quotes/milton-friedman/what-would-the-people-who-sold-us-goods-do-with-the-money-they-d-get/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [World trade depends on differences among countries, not similarities. Different countries are in different stages of development. It is appropriate for them to have…](https://sms4smile.com/quotes/milton-friedman/world-trade-depends-on-differences-among-countries-not-similarities/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [Is there some society you know of that doesn't run on greed? You think Russia doesn't run on greed? You think China doesn't run…](https://sms4smile.com/quotes/milton-friedman/is-there-some-society-you-know-of-that-doesn-t-run-on-greed-you-think/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [Well first of all, tell me, is there some society you know of that doesn't run on greed? You think Russia doesn't run on…](https://sms4smile.com/quotes/milton-friedman/well-first-of-all-tell-me-is-there-some-society-you-know-of-that/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [I think almost every economist would agree that government gets itself in trouble when it tries to interfere with voluntary behavior.](https://sms4smile.com/quotes/milton-friedman/i-think-almost-every-economist-would-agree-that-government-gets/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [It is most attractive about the US to people and countries with wealth is that it can provide security, insurance really, against political instability.…](https://sms4smile.com/quotes/milton-friedman/it-is-most-attractive-about-the-us-to-people-and-countries-with/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) > [Hong Kong is the bellwether. If the Chinese stick to their agreement to let Hong Kong go its own path, then China will also…](https://sms4smile.com/quotes/milton-friedman/hong-kong-is-the-bellwether-if-the-chinese-stick-to-their-agreement/) [Milton Friedman](https://sms4smile.com/quotes/author/milton-friedman/) [Explore all 444 Milton Friedman quotes ](https://sms4smile.com/quotes/author/milton-friedman/) ## More Change quotes > [Only within yourself exists the other reality for which you long. I can give you nothing that has not already its being within yourself.…](https://sms4smile.com/quotes/hermann-hesse/only-within-yourself-exists-the-other-reality-for-which-you-long-i/) [Hermann Hesse](https://sms4smile.com/quotes/author/hermann-hesse/) > [Life is full of change. That's how we learn and grow.](https://sms4smile.com/quotes/anonymous/life-is-full-of-change-that-s-how-we-learn-and-grow/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [I can't believe that I'm sitting in meetings with Steven Spielberg, Tom Hanks, and Annette Bening. I want to take on that responsibility to…](https://sms4smile.com/quotes/roger-ross-williams/i-can-t-believe-that-i-m-sitting-in-meetings-with-steven-spielberg/) [Roger Ross Williams](https://sms4smile.com/quotes/author/roger-ross-williams/) > [“…progress isn't necessarily about change but about things turning out as we want them to”](https://sms4smile.com/quotes/phil-hogan/progress-isn-t-necessarily-about-change-but-about-things-turning-out/) Phil Hogan > [Nobody can tell me that no changes are necessary in Washington.](https://sms4smile.com/quotes/william-weld/nobody-can-tell-me-that-no-changes-are-necessary-in-washington/) [William Weld](https://sms4smile.com/quotes/author/william-weld/) > [If my campaign is not in the debate, we will not be talking about how we really fix this problem of endless and expanding…](https://sms4smile.com/quotes/jill-stein/if-my-campaign-is-not-in-the-debate-we-will-not-be-talking-about-how/) [Jill Stein](https://sms4smile.com/quotes/author/jill-stein/) > [When you walk down the street of Kabul your values for life changes, they do change.](https://sms4smile.com/quotes/marco-pierre-white/when-you-walk-down-the-street-of-kabul-your-values-for-life-changes/) [Marco Pierre White](https://sms4smile.com/quotes/author/marco-pierre-white/) > [Your world will change whether or not you choose to change, but you have the power to choose it's direction.](https://sms4smile.com/quotes/napoleon-hill/your-world-will-change-whether-or-not-you-choose-to-change-but-you/) [Napoleon Hill](https://sms4smile.com/quotes/author/napoleon-hill/) > [I hope I continue to evolve.](https://sms4smile.com/quotes/charlotte-flair/i-hope-i-continue-to-evolve/) [Charlotte Flair](https://sms4smile.com/quotes/author/charlotte-flair/) > [“Stay focused on bringing people together and more on positive messaging so that you can be the change you wish to see in the…](https://sms4smile.com/quotes/germany-kent/stay-focused-on-bringing-people-together-and-more-on-positive/) [Germany Kent](https://sms4smile.com/quotes/author/germany-kent/) > [The biggest change for me as a mom was realizing I needed to put someone else before me. Now the hardest part about the…](https://sms4smile.com/quotes/kim-alexis/the-biggest-change-for-me-as-a-mom-was-realizing-i-needed-to-put/) [Kim Alexis](https://sms4smile.com/quotes/author/kim-alexis/) > [“After the funeral, my life changed. I felt as if time were suddenly precious, water going down an open drain, and I could not…](https://sms4smile.com/quotes/mitch-albom/after-the-funeral-my-life-changed-i-felt-as-if-time-were-suddenly/) [Mitch Albom](https://sms4smile.com/quotes/author/mitch-albom/) > [You practice mindfulness, on the one hand, to be calm and peaceful. On the other hand, as you practice mindfulness and live a life…](https://sms4smile.com/quotes/anonymous/you-practice-mindfulness-on-the-one-hand-to-be-calm-and-peaceful-on/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [Irish research will contribute to global progress and have the potential to help all countries realise the potential of their land sectors in addressing…](https://sms4smile.com/quotes/enda-kenny/irish-research-will-contribute-to-global-progress-and-have-the/) [Enda Kenny](https://sms4smile.com/quotes/author/enda-kenny/) > [No man can change himself into anything from sheer reason; he can only change into what he potentially is.](https://sms4smile.com/quotes/carl-jung/no-man-can-change-himself-into-anything-from-sheer-reason-he-can-only/) [Carl Jung](https://sms4smile.com/quotes/author/carl-jung/) [Browse all 33,920 Change quotes ](https://sms4smile.com/quotes/about/change/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Quotation", "text": "The problem is that, in a world of floating exchange rates, as Italy was before the euro, if one country is subjected to a shock which requires it to cut wages, it cannot do so with a modern kind of control and regulation system. It is much easier to do it by letting the exchange rate change. Only one price has to change, instead of many.", "creator": { "@type": "Person", "name": "Milton Friedman" }, "isPartOf": { "@id": "https://sms4smile.com/quotes/#website" }, "url": "https://sms4smile.com/quotes/milton-friedman/the-problem-is-that-in-a-world-of-floating-exchange-rates-as-italy/", "about": { "@type": "Thing", "name": "Change" }, "@id": "https://sms4smile.com/quotes/milton-friedman/the-problem-is-that-in-a-world-of-floating-exchange-rates-as-italy/#quotation", "image": { "@type": "ImageObject", "@id": "https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png", "contentUrl": "https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png", "url": "https://sms4smile.com/quotes/i/670/milton-friedman-616_change_the-problem-is-that-in-a-world-of-floati_2457272.png", "width": 1080, "height": 1080, "caption": "“The problem is that, in a world of floating exchange rates, as Italy was before the euro, if one country is…” — Milton Friedman", "creditText": "SMS4Smile Quotes", "creator": { "@id": "https://sms4smile.com/quotes/#organization" } } }, { "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://sms4smile.com/" }, { "@type": "ListItem", "position": 2, "name": "Quotes", "item": "https://sms4smile.com/quotes/" }, { "@type": "ListItem", "position": 3, "name": "Milton Friedman", "item": "https://sms4smile.com/quotes/author/milton-friedman/" }, { "@type": "ListItem", "position": 4, "name": "The problem is that, in a...", "item": "https://sms4smile.com/quotes/milton-friedman/the-problem-is-that-in-a-world-of-floating-exchange-rates-as-italy/" } ], "@id": "https://sms4smile.com/quotes/milton-friedman/the-problem-is-that-in-a-world-of-floating-exchange-rates-as-italy/#breadcrumb" }, { "@type": "WebSite", "@id": "https://sms4smile.com/quotes/#website", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "publisher": { "@id": "https://sms4smile.com/quotes/#organization" } }, { "@type": "Organization", "@id": "https://sms4smile.com/quotes/#organization", "name": "SMS4Smile Quotes", "url": "https://sms4smile.com/quotes/", "logo": { "@type": "ImageObject", "url": "https://sms4smile.com/quotes/wp-content/themes/sq/assets/icons/icon-512.png", "width": 512, "height": 512 } } ] } ```