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Why the Euro is the gold standard writ large…

Microsoft Word - AnnNew2.docxThe euro not only replicated key elements of the gold standard – but went much further: European currencies were simply abolished. States lost control over both their currency and their central bank. Parallels with the operation of the gold standard explain why, like the gold standard, the euro will fail.

The euro system denies monetary policy autonomy to states, and like the gold standard, insists on full capital mobility, over-values the shared currency, creates a sense of euphoria and excess when introduced into a new state; then applies deflationary pressures on indebted states, and like the gold standard encourages nationalisms, protectionism and political resistance: the very opposite of the liberalizing motives of its architects.

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7 Comments

  1. Mervyn Hyde says:

    It’s perfectly true that the Euro constrains the economy in exactly the same manner as the gold standard and can never work in it’s present use.

    We have a single currency, but fiscally unite the country as a whole, what is apparent though like the southern countries there is an imbalance between the north and south, Jeremy recognises that jobs provided by the state need to be transferred where possible to those areas,

    In truth though we need as he has also pointed out, to create jobs such as renewable energy, the reason Neo-Liberals oppose this is because they support the fossil fuel industry that is destroying the environment.

    If Europe is to survive, they must also drop their Neo-Liberal agenda and actively intervene in the economy, something I believe they refuse to do, which is why they have beaten Greece down, rather than rebuild their economy, Neo-Liberal economics is strangling the world economy.

  2. swatantra says:

    Much to be expected if we are heading for a Federal States of Europe, which would be no bad thing, with Britain being a key player at the top tables. A single currency would naturally be a prerequisite. But its unlikely to happen for at least another generation.

    1. Robert says:

      But that was not what we were told when we voted, it is what some people did say would happen.

      I’ve no doubt we will end up as the United States or Europe with France and Germany trying to control the rest. It may well be a good thing for Greece they may be bailed out for the next how many centuries it takes for them to get out of debt.

      But will the UK be in that I doubt it.

  3. David Ellis says:

    The ECB was given the task of supplying Euros at a rate that would keep inflation within a certain range. That should work. However, due to bank de-regulation the private banks and financial institutions were creating garbage money hand over fist out of the control of the ECB. When the banks went belly up the individual nations were required to bail them out. The poorer the nation the more counterfeit money their bankers had produced and the more their own spending had become dependent on it. A double whammy. Loss of tax income from the bankers ponzi scheme and the requirement to bail out the super rich creditors of the bankrupt banks. That is not different than what happened to currencies outside the Euro. The difference is that the nations outside the Euro could print their own money whilst those inside could not. But the north of England cannot print its own money either to the same effect so that the money that the UK printed for instance simply went to the bankers and the south of England.

    Printing your own money simply means the ability to destroy the value of your currency. No returning to the drachma was not an option but neither is the crippling austerity. What is needed is not austerity or stimulus but consolidation. Syriza’s first task should have been to end the bail out of their banks, take the means of production and exchange into social ownership and to confiscate the wealth of the Greek elites. Three measures that would have been popular with working people across the Eurozone and which would have protected the Greek economy in the event of it being thrown out of the Euro.

    1. Mervyn Hyde says:

      David: This interview with Warren Moseler explains exactly why Europe is failing and the economics surrounding employment and taxation.

      https://www.youtube.com/watch?v=JGuNpqYBkZk

    2. Verity says:

      Printing money (which in any case banks can do electronically at the moment anyway without democratic influence) will only weaken/destroy a currency if it was not used for productive returns both immediately and in its effects across the economy as a whole. Is there anyone who intends to use it unproductively?

      The challenge is to make the most effective investments in the economy/industry/infrastructure which will both be effective in the longer term and will persuade about its immediate and transparent effects.

      1. Mervyn Hyde says:

        Verity:
        “The challenge is to make the most effective investments in the economy/industry/infrastructure which will both be effective in the longer term and will persuade about its immediate and transparent effects.”

        Exactly what Jeremey wants to do, he has not properly fleshed his arguments out yet but hopefully will gain some insight from Professor Bill Mitchell.

        Money as you say is created electronically by the banks every time they make a loan, debt free money can be created every time there is a need, i.e. infrastructure, public expenditure, job creation, and any worthwhile public need.

        Money can be issued by the Bank of England and destroyed by taxation and interest rates.

        We don’t need private banks or the City Casino to manage our economy.

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