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Wynne Godley's Maastricht and All That[1] is a great explanation of why the Euro was, and in fact is, doomed to failure and the UK was correct to stay out. This

by User23 7y ago

Wynne Godley's Maastricht and All That[1] is a great explanation of why the Euro was, and in fact is, doomed to failure and the UK was correct to stay out. This essay was written less than a month after Black Wednesday, so I assume it was probably influenced by the event. Sadly the lesson was evidently not learned, as the word "fiscal" doesn't appear a single time in the article. The key lesson here for states is only ever acquire financial obligations in your own sovereign currency. This is why the Swiss were able to put a ceiling on the value of the CHF during the European Debt Crisis. Their ability to spend CHF is unlimited, so they could just keep expanding their balance sheet indefinitely buying Euros, which devalued the CHF. A sovereign can always devalue, but not necessarily do the opposite. [1] https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-al...

TMWNN 7y ago
>Wynne Godley's Maastricht and All That[1] is a great explanation of why the Euro was, and in fact is, doomed to failure and the UK was correct to stay out. The Guardian speculated in 2013 http://www.theguardian.com/business/economics-blog/2013/jun/02/britain-euro-what-if-joined http://www.theguardian.com/business/economics-blog/2013/jun/... that if Britain had joined the Euro: * The mid-2000s British housing bubble, and its collapse in 2007, would have been even bigger. * Britain would have had to ask the IMF, ECB, and EU for loans. * The Tories would in 2010 have promised a referendum to leave the Euro and won a majority. Labour would have won fewer than 100 seats, and UKIP would have "made spectacular gains". * The anti-Euro side would have won the referendum, and the currency would have collapsed. * "after a deep and painful recession economic recovery began". * "Britain would have destroyed the euro on departure, and would now be on the point of leaving the EU altogether. The idea that Farage might be the next prime minister would be quite credible."

by User23 7y ago

TMWNN 7y ago

>Wynne Godley's Maastricht and All That[1] is a great explanation of why the Euro was, and in fact is, doomed to failure and the UK was correct to stay out. The Guardian speculated in 2013 http://www.theguardian.com/business/economics-blog/2013/jun/02/britain-euro-what-if-joined http://www.theguardian.com/business/economics-blog/2013/jun/... that if Britain had joined the Euro: * The mid-2000s British housing bubble, and its collapse in 2007, would have been even bigger. * Britain would have had to ask the IMF, ECB, and EU for loans. * The Tories would in 2010 have promised a referendum to leave the Euro and won a majority. Labour would have won fewer than 100 seats, and UKIP would have "made spectacular gains". * The anti-Euro side would have won the referendum, and the currency would have collapsed. * "after a deep and painful recession economic recovery began". * "Britain would have destroyed the euro on departure, and would now be on the point of leaving the EU altogether. The idea that Farage might be the next prime minister would be quite credible."