What happened to indecent exposure laws?
To be blunt, Central Banks worldwide are NOT letting Fx float, and that is undermining part of the very bedrock of what could be agile, adaptive economics
Why do CBs feel the temptation to tinker with Fx?
There is, at heart, a failure to produce coherent policy, which is always due to failure to be honestly equitable about the consequences of coddling some lobbies over others.
Why is it stepping into the maelstrom to tinker with Fx instead of competing fiscal policies?
There's a simple conclusion from these observations. We cannot realistically achieve floating Fx while CBs remain "independent" of Treasury operations, fiscal policy and the Public Purpose of competing nations. That outcome would be illogical, given human nature.
Investor, saver & banking lobbies all coalesce in an urge to protect and insulate themselves from the responsibility of managing public policy in their home countries.
For free-riders, escapism is always a temptation. However it is not a productive strategy for members of any aggregate. Cost-of-coordination is always the highest cost, and return-on-coordination is always the highest return.
Warren Mosler has things exactly right. When we effectively went off the gold std for the final time - way back in 1933 - the very purpose of most CB functions became either negligible or completely obsolete.
Most CB functions today should be run as automatic apps, out of a lowly Treasury office in some back room. We could save a lot of expensive real-estate, salaries and public confusion by reducing what's left of Fed functions to automatic stabilizers.