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In the EU at least, monetary policy is a property of the currency (which crosses borders), while fiscal policy is a property of the government (associated with

In the EU at least, monetary policy is a property of the currency (which crosses borders), while fiscal policy is a property of the government (associated with a single administrative country). If the world evolves further into currency consolidation (which seems to be the direction aspired to by many technologists hoping for Internet money), this distinction will grow in relevance.

yingw787 6y ago
I kinda don't think after all this people want to move towards currency consolidation. Isn't the E.U. the only union and non-country to have a singular currency? And isn't that singular monetary policy something that causes a great deal of friction between member states (e.g. Greece and Germany back in '08)? I think if you took another vote among E.U. members to ratify the Maastricht treaty today, you might get a different result. What us technologists might aspire to is pretty different from the ground truth.
- pmorici 6y ago
  I think the idea is more like something along the lines of Bitcoin or similar digital currency with well known and defined rules about supply that serves as the defacto reserve currency but each country or region still has a local currency. Gives the benefits of a single easy to transact in currency while avoiding the disagreements that arise like in the EU.
- tathougies 6y ago
  Why do you call the EU a non-country? They clearly share sovereignty with their member states in much the same way the federal government of the United States shares sovereignty with its member states.
  - anotheracct_ 6y ago
    https://en.wikipedia.org/wiki/European_Union https://en.wikipedia.org/wiki/European_Union Go here, ctrl-f "country" and press enter a few times.
- navaati 6y ago
  > Isn't the E.U. the only union and non-country to have a singular currency? I guess there is also, at least, the good ol' african "Franc CFA"
- vasco 6y ago
  This friction as you call it, is happening again during the current crisis, again between southern european countries and mostly Netherlands and Germany, specifically on the topic of coronabonds which has been widely debated and made lots of headlines. The way the euro works the main direct benefits go to the largest exporting economies, with the weaker ones pretty much losing out. Then the idea is that this is offset by the stronger economies helping the weaker ones in the form of EU grants but there's always a big push back as these direct funds are seen as handouts while the benefits of the common currency are dismissed. This pressure is seen clearly in demands for harsher and harsher austerity. It doesn't help that some officials from northern economies keep showing how they really feel about the situation, going as far as providing quotes like southern countries "spending all their money on women and wine" and the whole PIIGs designation. It's a tough thing to try and rationalise for someone who largely believes in the EU project but who is originally from one of these southern countries and has felt the direct effects of the whole post-2008 period.
  - nelaboras 6y ago
    I think the narrative has changed quite a bit since the initial austerity policies of the 2009 crisis. Arguably some of the enforced changes were long overdue, while others went far beyond the reasonable. But it's also how they were implemented that mattered. Portugal was under the troika but efficiently implemented things and quickly got out of it. Greek and Cypriot governments tried to game the system again and again, e.g. the troika imposed on Greece (or rather agreed with Greece, there's some nuance) an obligation to reduce it's overblown public sector by reducing the number of public servants. They did make a mistake though as they did not specify which public servants. What does the Greek government do? They massively reduce the number of teachers, then turn around and ask the European social fund for money to cover annual replacement teacher contracts. But the overblown administration has not shrunk much (and each time the government changes they do as before and rehire their allies...). Instead everyone curses the EU/troika/Germany/... for 'imposing' these cuts when the cuts per se are often not the issue, but rather the implementation. You can also see why countries like Germany are scared of mutualised debt: Since the introduction of the euro, Italian debt has increased massively because it was so cheap. Easier to loan money and serve a few favors when the government will anyway change in 2 years and the current one doesn't have to bear responsibility for the long-term damage. It's of course a much more complex story, but there's no denying that irresponsible government spending is part of it. Italy is desperately hoping for inflation to shrink the debt:GDP ratio as it's become pretty impossible to pay it back anyway...
- skissane 6y ago
  > Isn't the E.U. the only union and non-country to have a singular currency? No, it isn't. In Africa, there is the West African CFA Franc issued by the West African Economic and Monetary Union, and the Central African CFA Franc issued by the Economic and Monetary Community of Central Africa – both are legacies of French colonialism, in which newly independent states decided to keep the common currency they had under the French colonial empire. In the Caribbean, there is the East Caribbean Dollar, issued by the Organisation of Eastern Caribbean States. It is used by independent states that were former British colonies, and also by two British overseas territories. Like the CFA Francs, it is a case of newly independent states choosing to retain the common currency they had under British rule. The idea of a common currency isn't that new. France, Belgium, Italy, Switzerland and Greece had a common currency between 1865 and 1927 (the Latin Monetary Union). Similarly, Sweden, Denmark and Norway had a common currency between 1873 and 1905 (the Scandinavian Monetary Union.)
User23 6y ago
I have a pretty good understanding of how the Fed and Treasury work together to implement both fiscal and monetary policy in the USA. Recent events have shown that the MMT claim that we can model them as a single entity has been observably proved beyond all doubt. However, my knowledge of the operational, rather than theoretical, realities of the Eurozone is threadbare at best. In my conceptual model the member states have theoretically given up monetary sovereignty, but in reality it appears that at least some are still able to browbeat the ECB into funding their deficits. I'd love it if someone who has a deep understanding of how monetary and fiscal policy are coordinated in the Eurozone could chime in, but I expect the answer is rather long since every member state has somewhat different circumstances.
- sschueller 6y ago
  Is the US effectively pushing their dept to other nations? Unlike any other currencies were it would just inflate it appears the rest of the world's central banks keep buying more and more dollars to keep the exchange rates stable enogh against their own. At the enormous amount of money being created I would assume Simbabwe or German like inflation but I don't see it happening. Exchange rates are more or less the same as a year ago.
  - User23 6y ago
    > Is the US effectively pushing their dept to other nations? It's actually the exact opposite of this. Other nations, such as Germany, are hungry to run an export surplus. Since the USA is only willing to buy foreign goods with dollars, this means that Germany must accumulate dollars as a result of its export driven economy. The whole notion that being a net exporter is virtuous and being a net importer is reproachable is obvious nonsense. Everyone can't be a net exporter after all, a counterparty is required. That said I find the notion that a nation could grow its GDP by "exporting" in the form of producing goods and then launching them into space comical, to say the least.

yingw787 6y ago

I kinda don't think after all this people want to move towards currency consolidation. Isn't the E.U. the only union and non-country to have a singular currency? And isn't that singular monetary policy something that causes a great deal of friction between member states (e.g. Greece and Germany back in '08)? I think if you took another vote among E.U. members to ratify the Maastricht treaty today, you might get a different result. What us technologists might aspire to is pretty different from the ground truth.

pmorici 6y ago
I think the idea is more like something along the lines of Bitcoin or similar digital currency with well known and defined rules about supply that serves as the defacto reserve currency but each country or region still has a local currency. Gives the benefits of a single easy to transact in currency while avoiding the disagreements that arise like in the EU.
tathougies 6y ago
Why do you call the EU a non-country? They clearly share sovereignty with their member states in much the same way the federal government of the United States shares sovereignty with its member states.
- anotheracct_ 6y ago
  https://en.wikipedia.org/wiki/European_Union https://en.wikipedia.org/wiki/European_Union Go here, ctrl-f "country" and press enter a few times.
navaati 6y ago
> Isn't the E.U. the only union and non-country to have a singular currency? I guess there is also, at least, the good ol' african "Franc CFA"
vasco 6y ago
This friction as you call it, is happening again during the current crisis, again between southern european countries and mostly Netherlands and Germany, specifically on the topic of coronabonds which has been widely debated and made lots of headlines. The way the euro works the main direct benefits go to the largest exporting economies, with the weaker ones pretty much losing out. Then the idea is that this is offset by the stronger economies helping the weaker ones in the form of EU grants but there's always a big push back as these direct funds are seen as handouts while the benefits of the common currency are dismissed. This pressure is seen clearly in demands for harsher and harsher austerity. It doesn't help that some officials from northern economies keep showing how they really feel about the situation, going as far as providing quotes like southern countries "spending all their money on women and wine" and the whole PIIGs designation. It's a tough thing to try and rationalise for someone who largely believes in the EU project but who is originally from one of these southern countries and has felt the direct effects of the whole post-2008 period.
- nelaboras 6y ago
  I think the narrative has changed quite a bit since the initial austerity policies of the 2009 crisis. Arguably some of the enforced changes were long overdue, while others went far beyond the reasonable. But it's also how they were implemented that mattered. Portugal was under the troika but efficiently implemented things and quickly got out of it. Greek and Cypriot governments tried to game the system again and again, e.g. the troika imposed on Greece (or rather agreed with Greece, there's some nuance) an obligation to reduce it's overblown public sector by reducing the number of public servants. They did make a mistake though as they did not specify which public servants. What does the Greek government do? They massively reduce the number of teachers, then turn around and ask the European social fund for money to cover annual replacement teacher contracts. But the overblown administration has not shrunk much (and each time the government changes they do as before and rehire their allies...). Instead everyone curses the EU/troika/Germany/... for 'imposing' these cuts when the cuts per se are often not the issue, but rather the implementation. You can also see why countries like Germany are scared of mutualised debt: Since the introduction of the euro, Italian debt has increased massively because it was so cheap. Easier to loan money and serve a few favors when the government will anyway change in 2 years and the current one doesn't have to bear responsibility for the long-term damage. It's of course a much more complex story, but there's no denying that irresponsible government spending is part of it. Italy is desperately hoping for inflation to shrink the debt:GDP ratio as it's become pretty impossible to pay it back anyway...
skissane 6y ago
> Isn't the E.U. the only union and non-country to have a singular currency? No, it isn't. In Africa, there is the West African CFA Franc issued by the West African Economic and Monetary Union, and the Central African CFA Franc issued by the Economic and Monetary Community of Central Africa – both are legacies of French colonialism, in which newly independent states decided to keep the common currency they had under the French colonial empire. In the Caribbean, there is the East Caribbean Dollar, issued by the Organisation of Eastern Caribbean States. It is used by independent states that were former British colonies, and also by two British overseas territories. Like the CFA Francs, it is a case of newly independent states choosing to retain the common currency they had under British rule. The idea of a common currency isn't that new. France, Belgium, Italy, Switzerland and Greece had a common currency between 1865 and 1927 (the Latin Monetary Union). Similarly, Sweden, Denmark and Norway had a common currency between 1873 and 1905 (the Scandinavian Monetary Union.)

User23 6y ago

I have a pretty good understanding of how the Fed and Treasury work together to implement both fiscal and monetary policy in the USA. Recent events have shown that the MMT claim that we can model them as a single entity has been observably proved beyond all doubt. However, my knowledge of the operational, rather than theoretical, realities of the Eurozone is threadbare at best. In my conceptual model the member states have theoretically given up monetary sovereignty, but in reality it appears that at least some are still able to browbeat the ECB into funding their deficits. I'd love it if someone who has a deep understanding of how monetary and fiscal policy are coordinated in the Eurozone could chime in, but I expect the answer is rather long since every member state has somewhat different circumstances.

sschueller 6y ago
Is the US effectively pushing their dept to other nations? Unlike any other currencies were it would just inflate it appears the rest of the world's central banks keep buying more and more dollars to keep the exchange rates stable enogh against their own. At the enormous amount of money being created I would assume Simbabwe or German like inflation but I don't see it happening. Exchange rates are more or less the same as a year ago.
- User23 6y ago
  > Is the US effectively pushing their dept to other nations? It's actually the exact opposite of this. Other nations, such as Germany, are hungry to run an export surplus. Since the USA is only willing to buy foreign goods with dollars, this means that Germany must accumulate dollars as a result of its export driven economy. The whole notion that being a net exporter is virtuous and being a net importer is reproachable is obvious nonsense. Everyone can't be a net exporter after all, a counterparty is required. That said I find the notion that a nation could grow its GDP by "exporting" in the form of producing goods and then launching them into space comical, to say the least.