The euro — gold cage of our time

19 June, 2016 at 09:17 | Posted in Economics | 2 Comments

 

The euro has taken away the possibility for national governments to manage their economies in a meaningful way — and in Greece the people has had to pay the true costs of its concomitant misguided austerity policies.

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The unfolding of the Greek tragedy during the last couple of years has shown beyond any doubts that the euro is not only an economic project, but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.

But do the peoples of Europe really want to deprive themselves of economic autonomy, enforce lower wages and slash social welfare at the slightest sign of economic distress? Is inreasing income inequality and a federal überstate really the stuff that our dreams are made of? I doubt it.

History ought to act as a deterrent. During the 1930s our economies didn’t come out of the depression until the folly of that time — the gold standard — was thrown on the dustbin of history. The euro will hopefully soon join it.

Mainstream economists have a tendency to get enthralled by their theories and models, and forget that behind the figures and abstractions there is a real world with real people. Real people that have to pay dearly for fundamentally flawed doctrines and recommendations.

Let’s make sure the consequences will rest on the conscience of those economists.

austerity22

2 Comments »

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  1. If the Euro currency is an enclosure which restricts the activities of certain countries, then it is not directly related to what is making poor people poor and restricting their chances for self-improvement. This claim is not explained here and is basically misleading, there being no logic in how a common system of money can affect those who have so little of it.

    National economics have long passed the gold-standard way of controlling our funds, and the current fecundity currency is the best we can manage to live with. Its not at all bad, and the creation of promissory money by electronics does not mean that it is an unstable situation nor of infinite depth. There are 2 basic ways that money circulates: 1. between earning households and producers for production and consumption of goods along with a certain amount of private savings and investment and 2. through banks and governments associated with big business, currency borrowings and loans (national debt) and their interest and between the capitalists and banks. These two kinds of money exchanges are not completely separated but as far as most poor people are concerned there is no connection so you cannot blame the existence of poverty on the money system.

    I have previously explained the cause of poverty and the failure of our society to provide for equality of opportunity.

  2. More fundamentally, the problem is government privileges for private credit creation.

    Why, for example, since the Euro is fiat for the Eurozone, may not all citizens have accounts at the ECB, the only place the Euro exists except for physical Euros (bills and coins)?

    Because then the poor would not be forced* to lend (a deposit is legally a loan) to banks to lower the borrowing costs of the rich, the most so-called creditworthy?

    Because fiat creation for the benefit of banks and other asset owners would be more difficult to justify?

    *Or else be limited to bills and coins.


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