3 ms·

Yeah I hate being able to use the same currency in many countries near mine

by jaapz 10mo ago

graemep 10mo ago
There is a hefty cost of that convenience: https://en.wikipedia.org/wiki/Euro_area_crisis https://en.wikipedia.org/wiki/Euro_area_crisis and the convenience is really just a small savings as card payments work everywhere. The solution is to have an EU wide budget so money can be swiftly moved between economies: the EU needs to be more like the US which has a large federal budget.
- netsharc 10mo ago
  Top economists have criticized the EU because of this (a currency union without a federal budget), but since this is HN, of course we have many many more experts, who can accurately (in their heads) dismiss the whole branch as stupid. In the US there's agreements so poor states get federal money, but in the EU if a country needs to be bailed out, 28 or so national parliaments have to discuss it and come to 1 agreement. Meanwhile the benefit of your own currency is that it helps the economy from getting too hot (too high Deutschmarks = BMWs get more expensive in non-DM countries (Dieter and Hans have to earn the same DMs to build them), German economy slows down... And when the economic conditions get tough, investments into your country (say Greece) slow down, meaning foreign investors need less Drachmas, price of Drachma falls, and the price of the Greek [what do they export] falls - Ioannis earns the same amount of Drachmas, but he needs to work longer to buy e.g. an imported iPhone, meaning his wage has actually been decreased... with the labour force barely noticing or making a big fuss. The Euro was more like pegging the whole of Europe to the Deutschmark, which gave the German economy the boom (no more overheating!), but to the pain of many other nations... https://www.npr.org/2011/01/25/133112932/paul-krugman-the-economic-failure-of-the-euro https://www.npr.org/2011/01/25/133112932/paul-krugman-the-ec... (Trigger warning, this name triggers that part of many genius brains that will dismiss his arguments because they're certain he's an idiot based on one or two quotes)
  - graemep 10mo ago
    Thanks for adding the details. I think Krugman is somewhat unfair to the architects of the Euro. As far as I can tell they expected political integration to follow so that federal budget would have followed and the problem solved. > but in the EU if a country needs to be bailed out, 28 or so national parliaments have to discuss it and come to 1 agreement. It also leads to worse agreements. The Euro crisis had to be solved in a way that was politically acceptable, and that punished the populations of the countries (at least in the case of Greece) that needed a bailout with unnecessary austerity policies.

Yeah I hate being able to use the same currency in many countries near mine

by jaapz 10mo ago

Yeah I hate being able to use the same currency in many countries near mine

There is a hefty cost of that convenience: https://en.wikipedia.org/wiki/Euro_area_crisis https://en.wikipedia.org/wiki/Euro_area_crisis and the convenience is really just a small savings as card payments work everywhere. The solution is to have an EU wide budget so money can be swiftly moved between economies: the EU needs to be more like the US which has a large federal budget.

netsharc 10mo ago
Top economists have criticized the EU because of this (a currency union without a federal budget), but since this is HN, of course we have many many more experts, who can accurately (in their heads) dismiss the whole branch as stupid. In the US there's agreements so poor states get federal money, but in the EU if a country needs to be bailed out, 28 or so national parliaments have to discuss it and come to 1 agreement. Meanwhile the benefit of your own currency is that it helps the economy from getting too hot (too high Deutschmarks = BMWs get more expensive in non-DM countries (Dieter and Hans have to earn the same DMs to build them), German economy slows down... And when the economic conditions get tough, investments into your country (say Greece) slow down, meaning foreign investors need less Drachmas, price of Drachma falls, and the price of the Greek [what do they export] falls - Ioannis earns the same amount of Drachmas, but he needs to work longer to buy e.g. an imported iPhone, meaning his wage has actually been decreased... with the labour force barely noticing or making a big fuss. The Euro was more like pegging the whole of Europe to the Deutschmark, which gave the German economy the boom (no more overheating!), but to the pain of many other nations... https://www.npr.org/2011/01/25/133112932/paul-krugman-the-economic-failure-of-the-euro https://www.npr.org/2011/01/25/133112932/paul-krugman-the-ec... (Trigger warning, this name triggers that part of many genius brains that will dismiss his arguments because they're certain he's an idiot based on one or two quotes)
- graemep 10mo ago
  Thanks for adding the details. I think Krugman is somewhat unfair to the architects of the Euro. As far as I can tell they expected political integration to follow so that federal budget would have followed and the problem solved. > but in the EU if a country needs to be bailed out, 28 or so national parliaments have to discuss it and come to 1 agreement. It also leads to worse agreements. The Euro crisis had to be solved in a way that was politically acceptable, and that punished the populations of the countries (at least in the case of Greece) that needed a bailout with unnecessary austerity policies.