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> But Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An indepen

> But Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t. And that makes a huge difference. Works for Panama, Ecuador, and El Salvador, all of which use the dollar. Worked for plenty of successful governments on the gold standard throughout history. And it works for every state and city and other regional government. It's really pretty partisan and tendentious to suggest that governments playing games with the currency is a fundamental tenet of governance. Just because your favored public policy techniques make use of currency manipulation doesn't mean a nation can't do without it, Mr. Krugman, even if the Scots are pretty far to the Left.

peteretep 12y ago
> Works for Panama, Ecuador, and El Salvador, all of which > use the dollar. Scotland! You too can have the economy of a Central American state! (Scotland's GDP: $216 billion, Panama $36b, Ecuador $84b, El Salvador $23b)
- ef4 12y ago
  Scotland was ground zero for the industrial revolution and has had relative peace within its borders for centuries. Those other three countries all experienced coups in living memory, and didn't seriously start industrializing until at least a century later than Scotland. Those factors are more than enough to explain a factor of four or five difference in GDP.
tormeh 12y ago
>Worked for plenty of successful governments on the gold standard That's just wrong. I'm sorry. Just Google it or something.
- fennecfoxen 12y ago
  Basically every government in history used commodity money for millenia. (Perhaps I should have said "using commodity money" instead of "on the gold standard". That was inexact and inaccurate.) And yes, it turns out there are problems with such systems, like recessions. Fortunately fiat money administered by a wise and knowing bureaucracy, like in the United States, renders your economy totally recession-proof!!! cough cough and if there IS a recession you can just bail out all the banks and everything will be magically better!!! cough hack gaaaaag Anyway, the problem with commodity money (or the gold standard) is price instability when the real price of gold rises or falls because of wild swings in the supply or in national economic output. If you're Scotland and your number one trading partner is the rest of the UK and they do a half-decent job at price stability and your government holds lots of GBP, borrows in GBP, and issues bonds in GBP... well, you don't really end up having that class of problem.
orbifold 12y ago
I assume they would just join the Euro zone sooner or later.

peteretep 12y ago

> Works for Panama, Ecuador, and El Salvador, all of which > use the dollar. Scotland! You too can have the economy of a Central American state! (Scotland's GDP: $216 billion, Panama $36b, Ecuador $84b, El Salvador $23b)

ef4 12y ago
Scotland was ground zero for the industrial revolution and has had relative peace within its borders for centuries. Those other three countries all experienced coups in living memory, and didn't seriously start industrializing until at least a century later than Scotland. Those factors are more than enough to explain a factor of four or five difference in GDP.

tormeh 12y ago

>Worked for plenty of successful governments on the gold standard That's just wrong. I'm sorry. Just Google it or something.

fennecfoxen 12y ago
Basically every government in history used commodity money for millenia. (Perhaps I should have said "using commodity money" instead of "on the gold standard". That was inexact and inaccurate.) And yes, it turns out there are problems with such systems, like recessions. Fortunately fiat money administered by a wise and knowing bureaucracy, like in the United States, renders your economy totally recession-proof!!! cough cough and if there IS a recession you can just bail out all the banks and everything will be magically better!!! cough hack gaaaaag Anyway, the problem with commodity money (or the gold standard) is price instability when the real price of gold rises or falls because of wild swings in the supply or in national economic output. If you're Scotland and your number one trading partner is the rest of the UK and they do a half-decent job at price stability and your government holds lots of GBP, borrows in GBP, and issues bonds in GBP... well, you don't really end up having that class of problem.

orbifold 12y ago

I assume they would just join the Euro zone sooner or later.