Impossible triangles

In Macroeconomics, there is an impossible triangle: You cannot simultaneously control

1. Interest rate
2. Inflation rate
3. Exchange rate

If you try to tackle two of them, the third one is automatically determined. Let us see how:

Suppose RBI wants a certain interest rate and a certain rate of inflation. To have a fixed interest rate, it will need to buy/sell bonds. That will increase/decrease money supply in the economy and lead to some inflation. To control inflation, RBI needs to make sure money supply in the system is same as previously. So, it would buy/sell forex. That would lead to an exchange rate over which RBI does not have control.

Similar reasoning can be applied for other two cases.

Even at VMware, there was an impossible triangle. There was tradeoff between

1. Number of hidden page faults
2. Context switch cost
3. (I forgot what it was.)

Of course, there are two way "On the one hand x, on the other hand y" types of things, but triangles are more interesting!