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Why does the US need to get rid of the euro (5)


1 Name: Citizen : 2019-01-05 02:43 ID:ocLdAGKW

> Seventy-one years ago, the Axis powers lost WWII, leaving the US with the demanding task of managing its victory and defining a new global architecture. The US did this by setting up ambitious institutions, such as the Bretton Woods system and NATO, and by supporting the European integration project. Institutions have much inertia, which while favoring stability, may prevent vital change in response to evolving situations. This explains both the success of many political projects, and their ultimate fall. The same applies to European integration.
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2 Name: Citizen : 2019-01-05 02:44 ID:ocLdAGKW

>Then something happened. The Soviet system collapsed, which among many other things, brought back to the fore what had for centuries been the root cause of much suffering: the difficult relationship between France and Germany. Berlin-wall panic suggested the nonsensical and impossible goal of European political union. The worst possible way was chosen to pursue it, namely by forcing it through establishment of a European monetary union. No democratic or even meaningful political process can take place in an area which does not share a language or national identity. Yet, despite advice to the contrary from prominent US economists (ranging from Feldstein to Krugman), a hasty marriage of convenience between France and Germany, with the single currency as wedding ring, was seen as necessary in Europe in order to avoid intra-European conflict. Much has been written about whether building a political house starting from a monetary roof was actually a mistake. Like any economic choice, the euro affected the distribution of income, creating losers and winners. The latter of course cannot bring themselves to consider it a mistake. While opinions on this point may differ, everybody agrees that as of today the euro is failing.
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3 Name: Citizen : 2019-01-05 02:45 ID:ocLdAGKW

>This Wille zur Macht is now backfiring. Keynes’s proposal at the Bretton Woods conference gives us good insights into what is happening. Keynes proposed to settle international trade in a supranational currency, the Bancor, issued by a world bank, which would charge an interest rate on negative and positive Bancor balances. The rationale for this apparently unfair symmetry (why force a creditor to pay interest, rather than earning it?) is that international debtors and creditors both benefit from international finance: thanks to international lending, the former can buy goods they otherwise could not afford, while the latter are able to sell goods that would otherwise remain in stock. By proposing such perishable money, a currency that by design could not be a store of value, Keynes aimed to discourage mercantilism, i.e. the temptation to hoard international assets rather than reinvesting them in the world economy, thus mitigating the potentially destabilizing properties of fixed exchange rates. The euro obtained the opposite result. Its rigidity fostered mercantilism both by helping redirect trade to the benefit of core countries, whose currency is undervalued in real terms, and by preserving the value of their net foreign assets.
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4 Name: Citizen : 2019-01-05 02:46 ID:ocLdAGKW

>Germany romped to victory by manipulating the forex market (as the US Treasury recently recognised), but must now choose between losing everything at once (through the collapse of its debtors) or little by little (through zero or negative interest rates). In the long run, irrational economic choices have no winners: bad economics cannot be good politics. What should have united Europe is now dividing it. The United Kingdom is going, and continental Europe must now choose between increasing confrontation or surrender to German hegemony. The US, like any global player, must reckon with the evidence that the euro has unnecessarily revived the German question, which it was meant to prevent.
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5 Name: Citizen : 2019-01-06 21:37 ID:Heaven

5GET