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Still, it worked before. For example Germany used to be a lot of little states with different rulers and different currencies. The money union worked out well.
by Tichy 15y ago
Still, it worked before. For example Germany used to be a lot of little states with different rulers and different currencies. The money union worked out well. And even within a country there are strong and weak economic regions. That alone does not seem to stand against a common currency.
I suppose even the US has different parts with different economic cycles and different economic strength.
- k-mcgrady 15y agoThat very interesting I didn't know that Germany previously worked like that. Your point about the US is valid. However as their national debt is $15 trillion they aren't exactly a model economy.
- veyron 15y agoEven if the debt is 15 Trillion and one ratings agency felt we didn't deserve the highest rating, investors are champing at the bit to purchase bonds.
- themichael 15y agoThen the FED would not have to purchase bonds.
- k-mcgrady 15y agoThe reason the US is not suffering more from its huge debt is because the US dollar is the primary reserve currency.
- flourpower 15y agoThat's more of a reflection of liquidity than of creditworthiness though.
- Tichy 15y agoI just checked with Wikipedia: the unification of Germany happened in 1871. Before then there were sometimes even ferocious wars among the states in Germany, including the Thirty Years War. That is one reason why people had high hopes for Europe: today it seems unthinkable to have a war between states of Germany (they don't have their own military either). Perhaps one day it could be as unthinkable to have war between European states.
- antirez 15y agoIt already is, it is not conceivable that any country in the euro monetary union will attack militarily another one. Actually I think that this crisis will show that countries will also be able to do big sacrifices to save other countries economically.
- nhaehnle 15y agoYour point about the US is valid. However as their national debt is $15 trillion they aren't exactly a model economy. Why are people so obsessed about the debt of sovereign governments these days? Think about it like this: there is (virtual) money in MMO games. Gold in World of Warcraft, ISK in Eve Online, or whatever. In an in-world accounting sense, this money is a debt (liability) of whoever runs the system. But it is ridiculous on the fact of it to worry about the total amount of money in those systems. So why is their this obsession with the debt? The most immediate reason is this gut reflex of "it needs to be paid back". But what one has to realize is that, for a monetary sovereign, paying back the debt is just exchanging one type of liability against another. The debt is money that has already been spent. Paying it back does not create new financial assets, it is just an asset swap. Why on earth would that be problematic? The other objection is that the interest paid on debt causes an undue redistribution of wealth. That point is one of ignorance: a monetary sovereign effectively sets the interest rate that it pays on its outstanding debt - that is what the monetary policy of the central bank is about. Seeing the true nature of money is initially scary, and perhaps this is what stops many from a deeper understanding. I can only hope that future generation will make fun of us for the way we are thinking about money.
- justincormack 15y agoBut the US (and UK) are prepared to monitize their debt via QE which Germany is vetoing. And the US allows internal bankruptcy, with a legal framework.