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>In the pre-Euro days it was a regular thing to read stories about how places like Italy had shaved a few zeroes off their Lira due to hyperinflation. >We don'
by nopriorarrests 8y ago
>In the pre-Euro days it was a regular thing to read stories about how places like Italy had shaved a few zeroes off their Lira due to hyperinflation.
>We don't have those stories now. I think the Euro has something to do with that.
Yes, but it's not like Italian budget magically turned to proficit because of euro adoption. It still contains deficit, the one which EU is not happy about, and they are currently fighting with Italy. Maybe if lira was still italian currency, Italy devalued it a bit and that would be the end of the story.
Instead, there is a eurozone-wide problem of how to deal with populist italian government, and the cost of this problem is... €2.1 trillion (that's the amount of italian debt).
So, the problem was not resolved. It just was shifted into the future, with unclear implications.
- chronid 8y agoWell, I see forcing member states to be fiscally responsible (Italy's current expenditures - after removing debt/interest repayments - are curiously forever increasing even under the worst "austerity") something a union should do. The problem is the Euro is not enough to do so. Devaluation won't fix Italy's problems in the long term, it just shifts them into the future. The devaluations of the lira in the last ~30 years of the last century and the flattening economic growth in the '90s are there to prove it. You cannot keep drugging your economy forever, you'll pay for it in the end.