28 Jun '12 17:30>
An interesting take from a left wing source
http://www.gregpalast.com/the-euro-is-a-big-success-no-kidding/
See, there's the problem. Using " using Keynesian monetary and fiscal juice to pull a nation out of recession" sounds great. And in theory, it is great.
But the problem is that once a government, gets that "Keynesian monetary and fiscal juice" flowing, it's impossible to turn off the spigot. Every temporary expenditure to shepherd the people through an economic crisis turns into a permanent entitlement that is politically difficult or impossible to reduce, let alone eliminate. And without politically difficult to pass tax increases, all it does is pass the burden on to a day of reckoning some time in the future.
If anything, the existence of the Euro brought the day of reckoning forward a decade or two, but that's a good thing. Now the crisis can be solved with some spending cuts and maybe an untapped Laffer-safe tax hike. Since we don't have the Euro, our crisis won't come until our deficit is so high as to be all but uncontrollable.
http://www.gregpalast.com/the-euro-is-a-big-success-no-kidding/
The idea that the euro has "failed" is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
-snip-
But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)
"It's very hard to fire workers in Europe," he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
etc.
See, there's the problem. Using " using Keynesian monetary and fiscal juice to pull a nation out of recession" sounds great. And in theory, it is great.
But the problem is that once a government, gets that "Keynesian monetary and fiscal juice" flowing, it's impossible to turn off the spigot. Every temporary expenditure to shepherd the people through an economic crisis turns into a permanent entitlement that is politically difficult or impossible to reduce, let alone eliminate. And without politically difficult to pass tax increases, all it does is pass the burden on to a day of reckoning some time in the future.
If anything, the existence of the Euro brought the day of reckoning forward a decade or two, but that's a good thing. Now the crisis can be solved with some spending cuts and maybe an untapped Laffer-safe tax hike. Since we don't have the Euro, our crisis won't come until our deficit is so high as to be all but uncontrollable.