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Euro isn't like the "most European currencies" and the past isn't a clear indication of the future. Wars are much different times than the mess that we are deal

by enra 18y ago

Euro isn't like the "most European currencies" and the past isn't a clear indication of the future. Wars are much different times than the mess that we are dealing with now. I also agree on the ECB goals that controlling inflation and stability is much more important than controlling booms and recessions. It is not even that much possible to do that with euro since countries economies are not similar or fully synched. Extensive monetary control could lead to big asynchronous problems. I agree that we have to see how well euro will do in the future.

mdasen 18y ago
Yeah, the euro is being managed quite well. In terms of recession vs. inflation control, most central banks don't see recessions as their domain at all. The ECB wades into it more than probably any except the Fed and it's probably a good thing. Most people hate the idea of manipulating money to deal with recessions and booms - heck, it pisses me off. It's not a good situation - it's often like picking political candidates; you choose the lesser evil. What people worry about with recession targeting is that it will cause inflation. It can and many countries have shown very bad results with it. The problem occurs because, as you expand the supply of money, each individual unit is worth less of the pie. That's ok for a short while. The problem that most countries get into is that they don't stop it when things get better or that there's a perception that they won't stop it when things get better. While the Fed plays a little looser than I would like, they've shown that they can effectively target recessions without causing inflationary problems by having long-term discipline. And people accept that it won't happen because of the Fed's history of it not happening. The ECB, while young, enjoys a good reputation and that's why they felt that they could continue to push rates down to target the recession (although not as strongly as the Fed has). They know that people accept that they have a good long-term monetary policy that won't just continually expand the money supply as many countries have. In terms of economies not fully synched, I don't fully see it. I mean, the economy of Massachusetts isn't going to move lockstep with the economy of Michigan. They're incredibly different - probably more different than, say, the economies of Germany and France. What makes the economies of different countries different? Differences in workforce, differences in natural resources, differences in industries. . . All of those vary regionally in the US. Iowa and Nebraska's farming economy aren't anything like Massachusetts' biotech economy. And, what we're seeing right now is that Europe is affected as a unit by this recession (or as much as ever happens). You can always make the case that you can subdivide something to be more accurate, but for practical purposes coming together works well. Do you think Europe is more diverse than the US in this way? That's serious because I could be overlooking something big that's just not on my mind after being up until 4am last night. The euro has been one of the greatest things to happen to Europe. It's not mismanaged and has a bright future, but it's premature to say that it's the new dollar. That would be like saying Linux is going to replace Windows on people's desktops. It might happen. Linux is good. It's gaining favor every day. It might be better. However, it will still be a good while before Windows is displaced if it ever is and it's premature to assume it will be.
- laut 18y ago
  Fed having a reputation of avoiding inflation? Are you kidding? Do you know why Bernanke's nickname is Helicopter Ben?
  - talboito 18y ago
    I'd thought the Helicopter Ben nickname was due to his frequent and effective use of Zangief in Street Fighter II. The Fed's focus over the last 25 yearsish has been on controlling inflation. Its focus over the last 8-15 months has been easy moneying away from a massive deflationary spiral. I'll take a ride on that helicopter.

by enra 18y ago

mdasen 18y ago

Yeah, the euro is being managed quite well. In terms of recession vs. inflation control, most central banks don't see recessions as their domain at all. The ECB wades into it more than probably any except the Fed and it's probably a good thing. Most people hate the idea of manipulating money to deal with recessions and booms - heck, it pisses me off. It's not a good situation - it's often like picking political candidates; you choose the lesser evil. What people worry about with recession targeting is that it will cause inflation. It can and many countries have shown very bad results with it. The problem occurs because, as you expand the supply of money, each individual unit is worth less of the pie. That's ok for a short while. The problem that most countries get into is that they don't stop it when things get better or that there's a perception that they won't stop it when things get better. While the Fed plays a little looser than I would like, they've shown that they can effectively target recessions without causing inflationary problems by having long-term discipline. And people accept that it won't happen because of the Fed's history of it not happening. The ECB, while young, enjoys a good reputation and that's why they felt that they could continue to push rates down to target the recession (although not as strongly as the Fed has). They know that people accept that they have a good long-term monetary policy that won't just continually expand the money supply as many countries have. In terms of economies not fully synched, I don't fully see it. I mean, the economy of Massachusetts isn't going to move lockstep with the economy of Michigan. They're incredibly different - probably more different than, say, the economies of Germany and France. What makes the economies of different countries different? Differences in workforce, differences in natural resources, differences in industries. . . All of those vary regionally in the US. Iowa and Nebraska's farming economy aren't anything like Massachusetts' biotech economy. And, what we're seeing right now is that Europe is affected as a unit by this recession (or as much as ever happens). You can always make the case that you can subdivide something to be more accurate, but for practical purposes coming together works well. Do you think Europe is more diverse than the US in this way? That's serious because I could be overlooking something big that's just not on my mind after being up until 4am last night. The euro has been one of the greatest things to happen to Europe. It's not mismanaged and has a bright future, but it's premature to say that it's the new dollar. That would be like saying Linux is going to replace Windows on people's desktops. It might happen. Linux is good. It's gaining favor every day. It might be better. However, it will still be a good while before Windows is displaced if it ever is and it's premature to assume it will be.

laut 18y ago
Fed having a reputation of avoiding inflation? Are you kidding? Do you know why Bernanke's nickname is Helicopter Ben?
- talboito 18y ago
  I'd thought the Helicopter Ben nickname was due to his frequent and effective use of Zangief in Street Fighter II. The Fed's focus over the last 25 yearsish has been on controlling inflation. Its focus over the last 8-15 months has been easy moneying away from a massive deflationary spiral. I'll take a ride on that helicopter.