Another central bank gadget

Zero Bound:

"It is technically feasible for the central bank to devalue the currency and peg the exchange rate at a level corresponding to an initial real depreciation of the domestic currency relative to the steady state. (2) If the central bank demonstrates that it both can and wants to hold the peg, the peg will be credible. That is, the private sector will expect the peg to hold in the future. (3) When the peg is credible, the central bank has to raise the short nominal interest rate above the zero bound to a level corresponding to uncovered interest rate parity. Thus, the economy is formally out of the liquidity trap. In spite of the rise of the nominal interest rate, the long real rate falls, as we shall see."

by Svensson.

Most of these gadgets split the Fed into two partitions, first: the spoof to raise expectations and second buy in at higher prices.   They all have one problem, expectations do not work the way they think.  The private sector expects the central bank to hold the peg for a while, never permanent. The result is the market bets the switching point.

How does a central bank devalue? There is only one way, Treasury has to double spend. Government has to apply the inflation tax. These folks will be inventing gadgets from here to doomsday when the better approach is to negotiate the inflation tax then implement it.