In the following years, Friedman, supported by the German economists and former gold standard advocates Friedrich Lutz and Albert Hahn, developed his argument for floating exchange rates, which was discussed at various MPS conferences. In particular, he argued that while the gold standard would function fully automatically in principle and would guarantee “freedom of political control” under the prevalent social and political circumstances, it was questionable whether governments would stick to the rules. He defended the stability of flexible exchange rates through a twofold argument. On the one hand, he reinterpreted the historical experiences of the 1920s by focusing on the “underlying instability of economic conditions.” On the other hand, he criticized the idea of destabilizing currency speculations theoretically, arguing that profitable speculations could actually stabilize the system.

Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, loc. 429