What the euro is all about

6 Sep, 2020 at 14:11 | Posted in Economics | 2 Comments

There are still some economists and politicians out there who think that the euro is the only future for Europe. However, there seem to be some rather basic facts about optimal currency areas that it would perhaps be wise to consider …

The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.

reaganomicsThat progenitor is former University of Chicago economist Robert Mundell. The architect of “supply-side economics” is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman …

The euro would really do its work when crises hit, Mundell explained. Removing a government’s control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

“It puts monetary policy out of the reach of politicians,” he said. “[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business” …

For Mundell, the euro wasn’t about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher …

Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:

“Monetary discipline forces fiscal discipline on the politicians as well.”

And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.

Greg Palast/The Guardian

2 Comments »

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  1. The Swedish basic law – the constitution – has writings about the common (allmännas) duty to guarantee the citizens right to work. As in full employment policies. I wrote in a debate in “Dagens Arbete”, the metal-workers paper, that setting the Swedish Riksbank free from the Parliaments control, would result in it breaking tthe basic law. And it has. Even though the Swedish voted no to the Euro.

  2. The results of eurosystem seems to be completely opposite to what this theory claims… just look at south eurozone nations and german/french banks. So actually the author is the only naive person to believe this was the plan…


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