6 ms·

A single currency is the best feature of the Eurozone. Politicians can't pull devaluation stunts anymore, and dealing with a single currency makes trade in Euro

by nawitus 13y ago

A single currency is the best feature of the Eurozone. Politicians can't pull devaluation stunts anymore, and dealing with a single currency makes trade in Europe a lot more efficient. The European Parliament and the Commission is the biggest problem with EU in my opinion.

ye 13y ago
> Politicians can't pull devaluation stunts anymore LOL. They just keep printing. http://www.ecb.europa.eu/stats/euro/circulation/html/index.en.html http://www.ecb.europa.eu/stats/euro/circulation/html/index.e... 2008 783B 2009 827B (+5.6%) 2010 861B (+4.1%) How much % do your savings generate again? :) I'm trying to find the figures of the amounts they printed after 2011, it's in hundreds of billions. http://www.marketoracle.co.uk/Article32265.html http://www.marketoracle.co.uk/Article32265.html http://www.marketoracle.co.uk/Article30666.html http://www.marketoracle.co.uk/Article30666.html
- andy_boot 13y ago
  I think you've missed his point. If the ECB prints more money but most of your trade is with other Euro countries (which it will be) then you can't really use the devaluation trick.
  - SilasX 13y ago
    Sure you can: mark down the nominal price of the goods you export. Not willing to make them competitive? Good luck.
    - afterburner 13y ago
      How? By lowering wages? That's the tricky part. That's why devaluation is so much easier.
      - jpatokal 13y ago
        To implement, yes, but the impact is the same. Those devalued wages are now worth less when it comes to buying imports, and since (to a first approximation) everything in this globalized world of ours is imported, even local goods and services have to hike up prices in response.
        afterburner 13y ago
        So you agree devaluation would be equally effective and easier.
      - aigarius 13y ago
        That's what Latvia did - 20% wage cut across the whole country, up to 40% wage cuts in some areas. Government sector lead the way and privates followed. Devaluation also destroys any savings that people might have AND makes the country less safe for the investors.
        afterburner 13y ago
        Wage cuts make any debt you still have harder to pay off though. Devaluation makes exports more competitive, which will attract investment as sales increase.
- justincormack 13y ago
  Er, banknotes in circulation is literally money printing yes, but not what people refer to when talking about "printing money". Most money isn't cash, and the amount of cash is fairly irrelevant in a modern economy.
- DasIch 13y ago
  They money being literally printed is a negligble amount and has effectively no effect on the value of the euro. Even if all those printed hundreds of billions were to be destroyed the result would be an inconvenience and nothing more.
atmosx 13y ago
In order for a common currency to be valuable in any way, you must have a common monetary policy, which practically means that every country should hand much more power to Brussels. No one is willing to do so, so we ended up with a totally irrational scheme on which you have the ECB controlling the money flow, while politicians with different agendas throughout Europe act like they don't depend on each other. Either we need to unite Europe, politically, or the EU project is doomed. There are any pro-Europeans left in the South, and being lazy or corrupted has nothing to do with this. Germany might be the only country who really benefited from the Euro, boosting it's exports beyond what would be possible without the Euro expanding the credit level. All others in the long run are doomed. No wonder the UK never gave in.
- nationcrafting 13y ago
  Plenty of countries have had common currencies throughout history without having a common fiscal policy (I'll assume you made a mistake when you wrote "common monetary policy", since monetary policy is the very thing you give up when you adopt a currency beyond your control). Many great empires, from the Duth republic to the British Empire, were built during periods when their government had no control over their currency.
dageshi 13y ago
My friend, having lived in a country which "pulled a devaluation stunt" of 25% (the UK) let me point out the currency devaluation was market driven and necessary because in the wake of the financial crisis the pound was very obviously overvalued. And the terrifying bogeyman of hyperinflation?!!! 5% for a couple of quarters and now it's at around 2.1%. And that's after said devaluation and bucket loads of printed money in the form of QE. In other words, I think your cure for is worse than the disease.
- yapcguy 13y ago
  QE is free money which has seeped into the stock market and housing market for a feel-good factor, but it hasn't fixed any of the structural problems in the economy. The Bank of England has kept interest rates at record lows for the longest period of time in its entire history. That should tell you the scale of the problem. Now, if low interest rates and QE were "good" for the economy, it would be the default strategy not the one of last resort. Don't be so quick to rule out hyperinflation. At some point, this charade will come to an end.
  - wisty 13y ago
    QE fixes some problems. It makes other problems worse. If everyone has borrowed too much money, the QE can fix it. It would be better if the regulators stopped banks from being irresponsible, but it's unrealistic to expect the government and private sector will do their jobs perfectly. If sticky wages are causing problems, inflation can fix that. Forcing wages down via inflation doesn't hurt workers so much, because it also means their debts will drop. (Yes, it punishes savers, but Greece apparently doesn't have too many of those). Assuming the central bank is mildly competent, it's good to have that option. The problem is, the EU might not have one single problem. Wages in Germany might be fine, while wages in Greece are too high. If the EU creates inflation, it will unfairly cause German workers to have a pay cut. If it keeps money tight, then Greek wages will be too high. If there were uniform standards for banks, wages, etc, then it wouldn't be such a problem. But Greece and Germany are different countries, and they'll have different standards. So the EU can't manage inflation is a targeted way.

by nawitus 13y ago

ye 13y ago

> Politicians can't pull devaluation stunts anymore LOL. They just keep printing. http://www.ecb.europa.eu/stats/euro/circulation/html/index.en.html http://www.ecb.europa.eu/stats/euro/circulation/html/index.e... 2008 783B 2009 827B (+5.6%) 2010 861B (+4.1%) How much % do your savings generate again? :) I'm trying to find the figures of the amounts they printed after 2011, it's in hundreds of billions. http://www.marketoracle.co.uk/Article32265.html http://www.marketoracle.co.uk/Article32265.html http://www.marketoracle.co.uk/Article30666.html http://www.marketoracle.co.uk/Article30666.html

andy_boot 13y ago
I think you've missed his point. If the ECB prints more money but most of your trade is with other Euro countries (which it will be) then you can't really use the devaluation trick.
- SilasX 13y ago
  Sure you can: mark down the nominal price of the goods you export. Not willing to make them competitive? Good luck.
  - afterburner 13y ago
    How? By lowering wages? That's the tricky part. That's why devaluation is so much easier.
    - jpatokal 13y ago
      To implement, yes, but the impact is the same. Those devalued wages are now worth less when it comes to buying imports, and since (to a first approximation) everything in this globalized world of ours is imported, even local goods and services have to hike up prices in response.
      - afterburner 13y ago
        So you agree devaluation would be equally effective and easier.
    - aigarius 13y ago
      That's what Latvia did - 20% wage cut across the whole country, up to 40% wage cuts in some areas. Government sector lead the way and privates followed. Devaluation also destroys any savings that people might have AND makes the country less safe for the investors.
      - afterburner 13y ago
        Wage cuts make any debt you still have harder to pay off though. Devaluation makes exports more competitive, which will attract investment as sales increase.
justincormack 13y ago
Er, banknotes in circulation is literally money printing yes, but not what people refer to when talking about "printing money". Most money isn't cash, and the amount of cash is fairly irrelevant in a modern economy.
DasIch 13y ago
They money being literally printed is a negligble amount and has effectively no effect on the value of the euro. Even if all those printed hundreds of billions were to be destroyed the result would be an inconvenience and nothing more.

atmosx 13y ago

In order for a common currency to be valuable in any way, you must have a common monetary policy, which practically means that every country should hand much more power to Brussels. No one is willing to do so, so we ended up with a totally irrational scheme on which you have the ECB controlling the money flow, while politicians with different agendas throughout Europe act like they don't depend on each other. Either we need to unite Europe, politically, or the EU project is doomed. There are any pro-Europeans left in the South, and being lazy or corrupted has nothing to do with this. Germany might be the only country who really benefited from the Euro, boosting it's exports beyond what would be possible without the Euro expanding the credit level. All others in the long run are doomed. No wonder the UK never gave in.

nationcrafting 13y ago
Plenty of countries have had common currencies throughout history without having a common fiscal policy (I'll assume you made a mistake when you wrote "common monetary policy", since monetary policy is the very thing you give up when you adopt a currency beyond your control). Many great empires, from the Duth republic to the British Empire, were built during periods when their government had no control over their currency.

dageshi 13y ago

My friend, having lived in a country which "pulled a devaluation stunt" of 25% (the UK) let me point out the currency devaluation was market driven and necessary because in the wake of the financial crisis the pound was very obviously overvalued. And the terrifying bogeyman of hyperinflation?!!! 5% for a couple of quarters and now it's at around 2.1%. And that's after said devaluation and bucket loads of printed money in the form of QE. In other words, I think your cure for is worse than the disease.

yapcguy 13y ago
QE is free money which has seeped into the stock market and housing market for a feel-good factor, but it hasn't fixed any of the structural problems in the economy. The Bank of England has kept interest rates at record lows for the longest period of time in its entire history. That should tell you the scale of the problem. Now, if low interest rates and QE were "good" for the economy, it would be the default strategy not the one of last resort. Don't be so quick to rule out hyperinflation. At some point, this charade will come to an end.
- wisty 13y ago
  QE fixes some problems. It makes other problems worse. If everyone has borrowed too much money, the QE can fix it. It would be better if the regulators stopped banks from being irresponsible, but it's unrealistic to expect the government and private sector will do their jobs perfectly. If sticky wages are causing problems, inflation can fix that. Forcing wages down via inflation doesn't hurt workers so much, because it also means their debts will drop. (Yes, it punishes savers, but Greece apparently doesn't have too many of those). Assuming the central bank is mildly competent, it's good to have that option. The problem is, the EU might not have one single problem. Wages in Germany might be fine, while wages in Greece are too high. If the EU creates inflation, it will unfairly cause German workers to have a pay cut. If it keeps money tight, then Greek wages will be too high. If there were uniform standards for banks, wages, etc, then it wouldn't be such a problem. But Greece and Germany are different countries, and they'll have different standards. So the EU can't manage inflation is a targeted way.