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To create a currency union that's sustainable, you have to commit to a fiscal union I have come to agree with this. I was a supporter of the Euro and Emu since

To create a currency union that's sustainable, you have to commit to a fiscal union I have come to agree with this. I was a supporter of the Euro and Emu since the 1990s, but I think I've been convinced that trying have a single currency without full fiscal union is folly. You should choose to either have balkanised currencies, or a federal financial bucket, meaning the richer countries subsidise the poorer ones. We went with Option C in Europe, and I don't have a lot of confidence that the Euro can survive in the long run in the current system.

HiLo 11y ago
Agreed. I simply can't imagine what would happen if our federal fiscal policy was left up to the 50 states individually. Jesus that would be bad. Texas, my personal and favorite example, would go from an economic powerhouse to unable to support its economy, ever, if anything went south, pun intended.
polishninja 11y ago
I agree. Without a fiscal union, you just have a fixed exchange rate. Look at the Euro for example. Since Greece and Germany make separate fiscal policies but have the same exchange rate (due to the Euro), if their labor force output (GDP) doesn't match then the real cost of the Euro goes up in the lower output country (Greece). They lose the ability to adjust policies based on their current economic situation. Each separate state in the US has a fixed exchange rate with each other (1 USD = 1 USD), but our fiscal policy is administered by a central authority that adjusts for overall US conditions, not just individual states.
mapt 11y ago
The more interesting take I've read on this is that the financial planners who instituted the Euro certainly saw this coming, and were using it in order to force through fiscal integration a decade or two down the line once they had achieved crisis conditions necessary for massive change.

HiLo 11y ago

Agreed. I simply can't imagine what would happen if our federal fiscal policy was left up to the 50 states individually. Jesus that would be bad. Texas, my personal and favorite example, would go from an economic powerhouse to unable to support its economy, ever, if anything went south, pun intended.

polishninja 11y ago

I agree. Without a fiscal union, you just have a fixed exchange rate. Look at the Euro for example. Since Greece and Germany make separate fiscal policies but have the same exchange rate (due to the Euro), if their labor force output (GDP) doesn't match then the real cost of the Euro goes up in the lower output country (Greece). They lose the ability to adjust policies based on their current economic situation. Each separate state in the US has a fixed exchange rate with each other (1 USD = 1 USD), but our fiscal policy is administered by a central authority that adjusts for overall US conditions, not just individual states.

mapt 11y ago

The more interesting take I've read on this is that the financial planners who instituted the Euro certainly saw this coming, and were using it in order to force through fiscal integration a decade or two down the line once they had achieved crisis conditions necessary for massive change.