The Impossible trinity (also known as the Trilemma) is a trilemma in international economics which states that it is impossible to have all three of the following at the same time:
- A fixed exchange rate.
- Free capital movement (absence of capital controls).
- An independent monetary policy.
It is both a hypothesis based on the Uncovered interest rate parity condition, and a finding from empirical studies where governments which have tried to simultaneously pursue all three goals have failed.
Read more about Impossible Trinity: Theoretical Derivation, Trilemma in Practice, Possibility of A Dilemma
Famous quotes containing the words impossible and/or trinity:
“Modern man must descend the spiral of his own absurdity to the lowest point; only then can he look beyond it. It is obviously impossible to get around it, jump over it, or simply avoid it.”
—Václav Havel (b. 1936)
“Nature is so perfect that the Trinity couldn’t have fashioned her any more perfect. She is an organ on which our Lord plays and the devil works the bellows.”
—Johann Wolfgang Von Goethe (1749–1832)