During the twentieth century, foreign-exchange intervention was
sometimes used in an attempt to solve the fundamental trilemma of
international finance, which holds that countries cannot simultaneously
pursue independent monetary policies, stabilize their exchange rates,
and benefit from free cross-border financial flows. Drawing on a trove
of previously confidential data, Strained Relations reveals the
evolution of US policy regarding currency market intervention, and its
interaction with monetary policy. The authors consider how
foreign-exchange intervention was affected by changing economic and
institutional circumstances--most notably the abandonment of the
international gold standard--and how political and bureaucratic factors
affected this aspect of public policy.