The London “Daily Telegraph” columnist, Ambrose Evan-Pritchard reported in an article on July 7,that the Dutch financial company, ING, has done a study that the possible collapse of the Euro currency would be a catastrophe for the European and world Economies.
In a new piece that I’ve written on “Currency Competition Instead of the Euro Monopoly,” I suggest that the Euro had been a mistake from the beginning, and has been driven more by political goals to create a United States of Europe that would be centrally regulated and controlled from Brussels and highly influenced by the French and the Germans, and has less to do with the economic rationales for a single currency in a single European market.
Instead, drawing upon F. A. Hayek’s case for “Choice in Currency,” I propose that the current fiscal and monetary crisis in Europe should be viewed as an opportunity to reverse course — to do away with the Euro, and return to national currencies in a setting in which the citizens of all the European countries would have the freedom to choose and use which ever currency in which they have the most confidence.
Of course, the final ideal is the “denationalization” of money, and ending all governmental control and central planning of the creation and quantity of money is society. But at least Hayek’s proposal from 1975 decentralizes that unfortunate and misplaced monopoly control, and breaks the hold of total centralized monetary central planning power over the length of the European continent.
Richard Ebeling
Best,
Richard Ebeling
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As Evans-Pritchard writes today, the whole euro bureaucracy is thuggish, antidemocratic, and in open violation of the Lisbon Treaty. Good riddance.
From The Euro Towards Ethical Money.
Willingly or unwillingly – due to the swinging of the pendulum of economic equilibrium – the reversal of the trend towards a worldwide counterfeit operation forces adjustments. Hopefully ethics education will catch up so the cycle of corruption doesn’t start up again in some other pseudo-economic form.
Interestingly enough, the MMT guys recommend this as well, so that guys like Greece can simply depreciate their currencies instead of reneging on pension promises/etc….
evan-pritchard is lamentable on economics (see: http://www.safehaven.com/article/17322/the-bad-policy-spiral). the end of the euro would be a good thing.
Remember the Asian currency crises in 97? How a lot of the Asian countries were over-valuing their currencies to prop up their entitlement states. Then raiders called their bluff and nailed them hard. Well, everybody in Europe was doing the same thing, and they knew they were vulnerable, and it scared the bejesus out of them, so they all united together into a single common currency. It’s not hard for a few hedge funds to throw a few billion at Singapore to force their central bank out of it’s reserves, but gathering a few trillion to nail a common Euro currency is a lot harder.
That is until now. From what I understand, you don’t massive reserves to call a countries bluff any-more, just the right kind of derivatives contracts so as to spread out risk.
Back in the ’90s, when the euro was still an embryo, Milton Friedman warned it would fail. His argument was very simple: a common fiat currency for countries with such different policies as Germany and Italy or The Netherlands and Spain cannot resist long before being torn apart.
Of course he was mocked and called a “free-marketer envious of the superior European social model”, even by many of his self-proclaimed “followers”.
Looks like he’s having the last laugh.
The euro is just part of a plan to strengthen German economy with French back up. That’s it. There are no higher goals, no other diabolical schemes about a “New World Order”. Other EMU countries were simply bullied or cajoled into joining. Greece is cashing the cheque for having been such a good lackey. Spain is currently reaping the fruits by selling bonds by the truckload: can they pay interests on those? No. But who cares, as long as Uncle Fritz backs you up.
But how long will Uncle Fritz be able to back you up? How long before costs will outweigh benefits?
@Kakugo
Actually, this whole affair will probably take the heaviest toll on Germany and France, as they’ve had a (relatively) hard-money policy for years, only to end up yoked to a bunch of inflationary losers.
The Euro is rising and rising again …
Latest (8 October 2010) Euro 1 = USD 1.3874
1 year (8/10/2009) Euro 1 = USD 1.3866 -0.0008(-0.06%)
2 year (8/10/2008) Euro 1 = USD 1.4688 +0.0814(5.87%)
3 year (8/10/2007) Euro 1 = USD 1.327 -0.0604(-4.35%)
Lowest Rate:0.8252 on 2000-10-26
Highest Rate:1.599 on 2008-07-15
Is that the euro rising or the dollar falling?
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