**You can't have your cake and eat it too

As the Frieden reading explains, if a country has significant capital mobility, different groups within a nation will have differing views on both the level of exchange rates as well as the flexibility of the exchange rate. While international traders and investors would like to see a high exchange rate which is not at risk of fluctuating, import-competing traded goods producers would like to see the opposite. This will lead to factions within a nation arguing over the politics of monetary policy, each hoping to serve their own interests. Frieden explains that because economies around the globe are becoming more integrated, this will become an increasingly politically charged debate. Moreover, the ‘cleavages’ between carious groups will become greater.
The Cohen reading, especially what he deems the ‘Unholy Trinity’, continues to highlight the difficulties a state may go through in handling monetary policy in an increasingly internationalized economy. As Cohen explains, a state must choose between autonomy over their monetary policy and the ability to stabilize their own exchange-rate; for a nation in a globally integrated economy, you cannot have your cake and eat it too. To complicate things further, each state at different times may have changing incentives when it comes to monetary policy and the global economy. Because an economic crisis in Mexico can spread abroad, the United States can no longer look the other way when a reckless economic policy is being pursued in other nations. Just as your neighbor setting his house on fire is hardly just his problem, the economy now suffers the problem of being a public good. Cohen explains that monetary cooperation can internalize this problem and help lead to stability. And when one state’s government stands to benefit from a policy that may hurt the overall economy, it can be a difficult problem as they are indeed an autonomous state and are not formally responsible to the global economy as much as their own countrymen. The Eichengreen reading then explains that while hegemonic stability theory might provide comfort in that a powerful nation can keep monetary policy under control, it turns out that his analysis of history gives reason to think a powerful nation, such as Britain or the U.S. aren’t completely behind the wheel, even if they want to be. At the end of the day, governments, especially democracies, are responsible to their own people and not to global economic interests and each has the right to pursue their own monetary policy, regardless if the ‘externalities’ of such policies are detrimental to other nations.