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I was surprised the article didn't mention the euro, specifically how Germany gets to denominate its goods in a cheap currency that doesn't fully reflect its st

by apo 9y ago

I was surprised the article didn't mention the euro, specifically how Germany gets to denominate its goods in a cheap currency that doesn't fully reflect its strong fiscal policies.

gumby 9y ago
The Mittelstand far predated the Euro; to my mind the Euro, if anything, favored the larger companies.
stephen_g 9y ago
This is a huge thing - Germany couldn't run its huge trade surplus without its currency appreciating and reducing its competitiveness otherwise. It's a pretty bad deal for the consumption-based Eurozone economies though - they have to internally devalue instead of just being able to devalue their exchange rate. It's one of the major problems with the Euro... It was a terrible idea from the start, and situations like Greece were foreseen by economists like the great Wynne Godley decades ago (see Maastricht and All That, London Review of Books, Oct 1992). Unfortunately the mainstream of economics still doesn't have a developed enough understanding of monetary systems to have worked that out yet...
- tim333 9y ago
  Dunno. German manufacturing success predates the Euro. The Swiss with a similar culture but an appreciating currency still run surpluses exporting stuff they make. https://www.tradingeconomics.com/articles/02212017075915.htm https://www.tradingeconomics.com/articles/02212017075915.htm
- lispm 9y ago
  > Germany couldn't run its huge trade surplus without its currency appreciating The Euro policy is not German monetary policy. Germany has always asked for a harder currency policy. Germany also had a huge trade surplus long before the Euro. The economic numbers were going down after a the reunification and its problems (collapse of the East German economy). Germany is now back to the same success West Germany had before the reunification. Now with a larger market (the EU integration now is deeper and with more countries), simplified exports to the larger market (mostly) with a common currency, a much better access to east Europe as an emerging market, ...
- samsonradu 9y ago
  Right, the Euro took away other countries ability to manipulate their currencies and forced them to play fair in the trade game where Germany is king. Besides they also have a free market (EU) to sell to, while outsiders have to pay tariffs. As for the other countries, all they can do is cut down importing I guess?

by apo 9y ago

I was surprised the article didn't mention the euro, specifically how Germany gets to denominate its goods in a cheap currency that doesn't fully reflect its strong fiscal policies.

gumby 9y ago

The Mittelstand far predated the Euro; to my mind the Euro, if anything, favored the larger companies.

stephen_g 9y ago

This is a huge thing - Germany couldn't run its huge trade surplus without its currency appreciating and reducing its competitiveness otherwise. It's a pretty bad deal for the consumption-based Eurozone economies though - they have to internally devalue instead of just being able to devalue their exchange rate. It's one of the major problems with the Euro... It was a terrible idea from the start, and situations like Greece were foreseen by economists like the great Wynne Godley decades ago (see Maastricht and All That, London Review of Books, Oct 1992). Unfortunately the mainstream of economics still doesn't have a developed enough understanding of monetary systems to have worked that out yet...

tim333 9y ago
Dunno. German manufacturing success predates the Euro. The Swiss with a similar culture but an appreciating currency still run surpluses exporting stuff they make. https://www.tradingeconomics.com/articles/02212017075915.htm https://www.tradingeconomics.com/articles/02212017075915.htm
lispm 9y ago
> Germany couldn't run its huge trade surplus without its currency appreciating The Euro policy is not German monetary policy. Germany has always asked for a harder currency policy. Germany also had a huge trade surplus long before the Euro. The economic numbers were going down after a the reunification and its problems (collapse of the East German economy). Germany is now back to the same success West Germany had before the reunification. Now with a larger market (the EU integration now is deeper and with more countries), simplified exports to the larger market (mostly) with a common currency, a much better access to east Europe as an emerging market, ...
samsonradu 9y ago
Right, the Euro took away other countries ability to manipulate their currencies and forced them to play fair in the trade game where Germany is king. Besides they also have a free market (EU) to sell to, while outsiders have to pay tariffs. As for the other countries, all they can do is cut down importing I guess?