Tallest pygmy effects are fragile, especially when they are reliant on self-fulfilling prophecies or network effects. If everyone suddenly thought the Euro was the most stable currency, the resulting switch would destabilize the dollar and hurt both its value and the US economy as a whole.
This is begging the question. If everyone suddenly thought the Euro was the most stable currency, something dramatic would have had to have happened to shift the stock market’s assessment of the fundamentals of the US vs. EU economies and governments. Economies are neither fragile nor passive, and these kinds of mass shifts in opinion on economic matters don’t blow with the wind. Furthermore, people are likely to hedge their bets. If the US and EU currencies are similar in perceived stability, serious investors are likely to diversify.
Which question? That of whether the stability of currencies in in part caused by self-fulfilling prophecies? You seem to be saying that self-fulfilling prophecies dont happen dont happen with competent predictors. Do you assert this as a possibility not disproven, or as a fact?
Which question? That of whether the stability of currencies in in part caused by self-fulfilling prophecies? You seem to be saying that self-fulfilling prophecies dont happen dont happen with competent predictors. Do you assert this as a possibility not disproven, or as a fact?