Comments on: The Moral Hazard of the Euro http://archive.mises.org/16243/the-moral-hazard-of-the-euro/ Proceeding Ever More Boldly Against Evil Fri, 17 May 2013 22:36:06 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Joe http://archive.mises.org/16243/the-moral-hazard-of-the-euro/comment-page-1/#comment-768478 Joe Mon, 28 Mar 2011 20:17:09 +0000 http://blog.mises.org/?p=16243#comment-768478 Jesus,
Great article. I don’t know if the unintended (unknown) consequences outweight the positives the Euro brings to the member countries. (Don’t monetize the debt) Should we refer back to the wise advice, not to put all your Euro’s in one basket?

]]> By: Dick Fox http://archive.mises.org/16243/the-moral-hazard-of-the-euro/comment-page-1/#comment-768464 Dick Fox Mon, 28 Mar 2011 18:47:54 +0000 http://blog.mises.org/?p=16243#comment-768464

…the single currency showed one of its “advantages.” Without the euro, the Spanish government would have most certainly devalued its currency as it did in 1993, printing money to reduce its deficit. This would have implied a revolution in the price structure and an immediate impoverishment of the Spanish population as import prices would have soared. Furthermore, by devaluing, the government could have continued its spending without any structural reforms. With the euro, the Spanish (or any other troubled government) cannot devalue or print its currency directly to pay off its debt.

Professor,

Thank you for pointing this out. Many misunderstand the euro and blame it for everything bad that happens in Europe. In truth the relationship of the euro to the countries in the EEC are much the same as the relationship of the dollar to the states in the US. We recognize the difference between the economic policies of California versus Texas but no one would be foolish enough to blame the dollar and propose that California and Texas develop their own currencies.

The euro has actually been a much greater benefit than a problem in Europe during the economic slowdown. Had each country been able to devalue a domestic currency the people of these countries would be in grave economic conditions.

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