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All countries in the Eurozone monetary system are hamstrung by the fact that they don’t issue their own currencies. There is no fiscal authority at the same le

by dools 2y ago

All countries in the Eurozone monetary system are hamstrung by the fact that they don’t issue their own currencies. There is no fiscal authority at the same level as the monetary authority so they’re like states rather than countries but with no federal government.

mixdup 2y ago
As a dumb American from the outside, I feel like the EU is on a path to full federalism, and they should just get it over with. We figured out with the Articles of Confederation very quickly, even in the 18th century, that it wasn't a viable path
- piva00 2y ago
  The EU is around only 30 years old, there's no way to push for federalism until all the cultures inside it start to internalise being European first. There's a lot of EU-skeptics in most countries, pushing too hard towards federalism will very likely break the EU apart from the push back coming from national anti-EU parties. Just look at Brexit to see what anti-EU sentiment can do if the environment is ripe. It'll take at least another 30-50 years for any meaningful push for federalism to be possible.
epolanski 2y ago
The euro is the best part of the eurozone, period. That I'm not gonna criticize even a bit. Without it it would be much worse.
- dools 2y ago
  It's handy to have the same currency, but it's a terrible choice economically because it limits the sovereignty of each nation. "But there is much more to it all. It needs to be emphasised at the start that the establishment of a single currency in the EC would indeed bring to an end the sovereignty of its component nations and their power to take independent action on major issues. As Mr Tim Congdon has argued very cogently, the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence. If a country gives up or loses this power, it acquires the status of a local authority or colony. Local authorities and regions obviously cannot devalue. But they also lose the power to finance deficits through money creation while other methods of raising finance are subject to central regulation. Nor can they change interest rates. As local authorities possess none of the instruments of macro-economic policy, their political choice is confined to relatively minor matters of emphasis – a bit more education here, a bit less infrastructure there. I think that when Jacques Delors lays new emphasis on the principle of ‘subsidiarity’, he is really only telling us we will be allowed to make decisions about a larger number of relatively unimportant matters than we might previously have supposed. Perhaps he will let us have curly cucumbers after all. Big deal!" https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastri...
  - epolanski 2y ago
    > because it limits the sovereignty of each nation Why are you pushing such a bs populist agenda? Those read like the weak and pointlessly stupid arguments I've heard around brexit and each country deciding per se, etc, etc. As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before. The Eurozone and common fiscal policy is the only thing that keeps our populist governments in check. And don't you think that this wasn't known when the eurozone and common currency was decided among the members? The pros *far* outweight the cons. It's not even an argument. Opinions about the euro have always been positive and no country would go back. The european commission regularly polls europeans for their stance towards the euro: > Nearly eight out of ten respondents in the euro area think that having the euro is a good thing for the EU and nearly seven out of ten respondents think that having the euro is a good thing for their country. Of all the things in the EU, the Euro is by far the most positive, without it the last 20 years would've been an absolute disaster for many countries in Europe.
    - dools 2y ago
      > As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before. My point is that sovereignty over issuing currency is synonymous with sovereignty in general. What you're saying is that you're glad the government in Italy is more like a state, than a nation. That's a fine point of view, but it implies that your country is incapable of self-governance. Do you think that's the case? It should also be noted that I don't think there is any issue with economic federation, only that there is economic federation without political federation. As such, you have a monetary body whose power exceeds any political authority. However monetary policy can't truly operate in the absence of fiscal policy, so what you really have is a bank as your federal government.
      - epolanski 2y ago
        You have a solid point, yes I don't trust half the governments in eurozone to conduct their monetary policy. And yes, I agree that we have a strong fiscal authority (the eurozone has strict rules for members about debt, deficit, spending, etc) without a strong political one. But it's an okay compromise. The eurozone should indeed move into a federal entity, but I don't see that happening anytime soon. A common currency is a massive boost to tourism and trading. Just think about the fact that many non-eurozone countries still bill tourists in euros, even turkey does that in their state run museums.

by dools 2y ago

mixdup 2y ago

As a dumb American from the outside, I feel like the EU is on a path to full federalism, and they should just get it over with. We figured out with the Articles of Confederation very quickly, even in the 18th century, that it wasn't a viable path

piva00 2y ago
The EU is around only 30 years old, there's no way to push for federalism until all the cultures inside it start to internalise being European first. There's a lot of EU-skeptics in most countries, pushing too hard towards federalism will very likely break the EU apart from the push back coming from national anti-EU parties. Just look at Brexit to see what anti-EU sentiment can do if the environment is ripe. It'll take at least another 30-50 years for any meaningful push for federalism to be possible.

epolanski 2y ago

The euro is the best part of the eurozone, period. That I'm not gonna criticize even a bit. Without it it would be much worse.

dools 2y ago
It's handy to have the same currency, but it's a terrible choice economically because it limits the sovereignty of each nation. "But there is much more to it all. It needs to be emphasised at the start that the establishment of a single currency in the EC would indeed bring to an end the sovereignty of its component nations and their power to take independent action on major issues. As Mr Tim Congdon has argued very cogently, the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence. If a country gives up or loses this power, it acquires the status of a local authority or colony. Local authorities and regions obviously cannot devalue. But they also lose the power to finance deficits through money creation while other methods of raising finance are subject to central regulation. Nor can they change interest rates. As local authorities possess none of the instruments of macro-economic policy, their political choice is confined to relatively minor matters of emphasis – a bit more education here, a bit less infrastructure there. I think that when Jacques Delors lays new emphasis on the principle of ‘subsidiarity’, he is really only telling us we will be allowed to make decisions about a larger number of relatively unimportant matters than we might previously have supposed. Perhaps he will let us have curly cucumbers after all. Big deal!" https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastricht-and-all-that https://www.lrb.co.uk/the-paper/v14/n19/wynne-godley/maastri...
- epolanski 2y ago
  > because it limits the sovereignty of each nation Why are you pushing such a bs populist agenda? Those read like the weak and pointlessly stupid arguments I've heard around brexit and each country deciding per se, etc, etc. As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before. The Eurozone and common fiscal policy is the only thing that keeps our populist governments in check. And don't you think that this wasn't known when the eurozone and common currency was decided among the members? The pros *far* outweight the cons. It's not even an argument. Opinions about the euro have always been positive and no country would go back. The european commission regularly polls europeans for their stance towards the euro: > Nearly eight out of ten respondents in the euro area think that having the euro is a good thing for the EU and nearly seven out of ten respondents think that having the euro is a good thing for their country. Of all the things in the EU, the Euro is by far the most positive, without it the last 20 years would've been an absolute disaster for many countries in Europe.
  - dools 2y ago
    > As an Italian I'm stoked that my country has given up sovereignty on money printing, it would've been a disaster otherwise as it has been for decades before. My point is that sovereignty over issuing currency is synonymous with sovereignty in general. What you're saying is that you're glad the government in Italy is more like a state, than a nation. That's a fine point of view, but it implies that your country is incapable of self-governance. Do you think that's the case? It should also be noted that I don't think there is any issue with economic federation, only that there is economic federation without political federation. As such, you have a monetary body whose power exceeds any political authority. However monetary policy can't truly operate in the absence of fiscal policy, so what you really have is a bank as your federal government.
    - epolanski 2y ago
      You have a solid point, yes I don't trust half the governments in eurozone to conduct their monetary policy. And yes, I agree that we have a strong fiscal authority (the eurozone has strict rules for members about debt, deficit, spending, etc) without a strong political one. But it's an okay compromise. The eurozone should indeed move into a federal entity, but I don't see that happening anytime soon. A common currency is a massive boost to tourism and trading. Just think about the fact that many non-eurozone countries still bill tourists in euros, even turkey does that in their state run museums.