One Euro, 1 Europe (One Love)

First up, from Playing for Change | Song Around the World, a Bob Marley/Curtis Mayfield song:

One Love

And from Inference Review:

One Euro, One Europe
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The Greek government-debt crisis began inward Oct 2009. In its aftermath, numerous books in addition to articles convey been published predicting the breakup of the eurozone, the monetary wedlock betwixt 19 of the twenty-eight European Union (EU) fellow member states. Commentators convey proposed a diverseness of reasons why such a breakup powerfulness occur: a public-debt crisis, the collapse of Italy’s banks, the European Central Bank’s (ECB) expansionary monetary policy, accelerating inflation inward southern Europe, the rejection of austerity measures, insufficient financial integration, the election of euroskeptic parties, or fifty-fifty a state of war alongside the major international currencies. The complexity of the TARGET2 scheme used past times the key banks to brand transfers inside the eurozone has too been cited.¹ Increasing residual differences betwixt creditor in addition to debtor key banks would inevitably Pb to the implosion of TARGET2 in addition to the euro.

The adoption of a mutual currency comes at a cost: a unmarried currency establishes a fixed telephone substitution charge per unit of measurement scheme alongside the fellow member states.² In the illustration of the eurozone, this is subject upon sufficient deposits existence held past times the Economic in addition to Monetary Union (EMU) to absorb the externalities of the euro—factors affecting the euro that are non reflected inward marketplace prices. Can this organization last maintained? Writing inward 2014, Jens Nordvig offered a prediction for the futurity prospects of the eurozone.³ As business office of his analysis, Nordvig noted that betwixt the years 1918 in addition to 2012 a total of sixty-seven monetary unions were formed. The eurozone, Nordvig believes, volition portion their fate.
They all failed.

The Inflationary or Deflation of the Euro
In his recent book, L’euro: comment la monnaie unique menace l’avenir de l’Europe (The Euro: How the Single Currency Threatens the Future of Europe), Joseph Stiglitz condemned the anti-inflationary mandate of the ECB:

In the illustration of Europe alone, the cumulative loss due to the financial crisis amounts to thousands of billions of dollars. Nobody, non fifty-fifty the most ardent defender of the ECB’s focus on inflation, could brand feel of this figure. The bank’s priorities were wrong, but it was non the mistake of the ECB: its mission was focused on inflation, it was doing what it had been told to do, quite simply.⁴

He too offered an alternative solution for managing the 2008–2009 financial crisis:

If reward in addition to prices had risen inward Germany, the value of the euro would convey fallen, in addition to the countries affected past times the crisis would convey give-up the ghost to a greater extent than globally competitive. This method would convey been much to a greater extent than effective: the costs borne past times FRG would convey been lower than those imposed on countries inward crisis.⁵

Stiglitz’s proposal would convey had no practical effect. His implicit criticism that the ECB implemented an insufficiently inflationary policy is notwithstanding significant. This overly restrictive policy is, inward fact, the supposed crusade of the 2008–2009 crisis.

Philipp Bagus, on the other hand, is suspicious close the back upward alongside the traditionally inflationary Latin countries for the euro in addition to the creation of the ECB:

The governments of the Latin countries, peculiarly France, considered the euro an effective agency of getting rid of the abhorred deutschmark. The deutschmark was, earlier the introduction of the euro, the criterion that exposed the mismanagement of irresponsible governments. Although the Bundesbank inflated the coin supply, it was producing coin at a slower stair than the countries, peculiarly those inward southern Europe with high inflation rates, that used a key depository financial establishment to finance their deficits to a greater extent than generously. The telephone substitution charge per unit of measurement against the deutschmark served every bit a betoken of reference in addition to comparison. The governments of the inflationary countries feared this comparing with the Bundesbank … The euro was advantageous for the Latin countries inward that inflation could last continued piece the right away proof of an appreciating deutschmark had disappeared. Hidden inflation could continue.⁶

The irreconcilable views of Stiglitz in addition to Bagus are reflective of the philosophical differences betwixt Keynesians in addition to monetarists regarding the purpose of money. For John Maynard Keynes in addition to his successors, relative levels of consumption in addition to savings rest constant, in addition to households hit upward one's heed consumption primarily according to their income. Levels of economical action in addition to job are subject on demand, which could, inward turn, last encouraged past times printing money. For the heirs of Jean-Baptiste Say, such every bit Milton Friedman, Friedrich Hayek, in addition to Ludwig von Mises, coin only has value if it tin last used to purchase other goods; the value of the goods does non depend on the quantity of money, but on all the other goods available. Monetary creation may convey an outcome on the nominal prices of goods, but non on their existent value....MUCH MORE