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Unformatted text preview: an international food and agriculture program, technology transfer from North to South, and the democratization of the economic system. Unholy Trinity Hypothesis in international economicsdeveloped in the 1960s by Mundell, that it is impossible to have all three of the following at the same time * A fixed exchange rate * Free capital movement * An independent monetary policy. The point is that you can't have it all: A country must pick two out of three. It can fix its exchange rate without emasculating its central bank, but only by maintaining controls on capital flows (like China today); it can leave capital movement free but retain monetary autonomy, but only by letting the exchange rate fluctuate (like Britain--or Canada); or it can choose to leave capital free and stabilize the currency, but only by abandoning any ability to adjust interest rates to fight inflation or recession (like Argentina today, or for that matter most of Europe)....
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- Winter '10