Of all the legion of bad outcomes that result from political ambition, the most striking of our times is surely the euro, an unashamedly political project bolted on to sovereign European nations of long and proud competing traditions in the hope of making them more like the United States, at least in terms of economic prowess.
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Samizdata quote of the dayJohnathan Pearce (London) · Economics, Business & Globalization · European Union · Slogans & Quotations January 21st, 2015 |
 25 comments to Samizdata quote of the day |
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The Euro is not a particularly bad fiat currency – but nor is it a particularly good one.
The special rules that were supposed to prevent the “ECB” just creating Euros from nothing and buying government and private debt paper with these Euros, have proved to be a vast lie.
My opinion remains the same as it has long been.
In spite of falls over recent years I believe that physical gold and silver (not paper saying you own X – the actual physical commodity) is the least worst option.
If gold and silver loose their value other investments will no longer concern us – as the currency of such a time will be ammunition.
Yup. PMs are money. Everything else is a promissory note.
One advantage the Seppos have is a large entrepreneurial class dating back from the first winter when the Pilgrim colony nearly failed. Britain used to have one but the unions and politicians have attacked them but when the present cabal of criminals(Westminster) fail it will rise again, there’s no choice. The Communists will not seize government as Hitler and Mussolini both communists saw the disaster in the Soviet Union opted for Fascism the pinnacle of socialist ideology. Any ideology is crap. Britain has a market of 60 million in an island that has coal and water, the will to survive will drive change.
I have long proposed a world currency based on baby giant pandas: either we will have a long-term stable currency, or vastly more pandas – a clear win-win. ;^)
So Johnathan Pearce is in essence criticizing gold* and praising inflationists like Warner?
The Euro took a bit of power from inflationist Governments. While i criticize the Euro imposition i think that a monetary exchange/money value should be neutral and not a policy weapon. The Euro in that regard is still – for how much longer remain to be seen, including the Paul Marks lie remarks – is better than national currencies for the Government of de jour playground.
*- i am exaggerating a bit.
You are welcome, PfP.
Contrary to what some people may have been told (and believe in all good faith) the Euro has nothing to do with gold.
“Paul you are telling people what they already know”.
I am a hobbit – I am even from the English Midlands and have a big belly and large hairy feet.
In fact everything I say (or write)_ is telling people what they, deep down, already know.
Huh? Who are those people, and who told them that?
Paul, hobbits actually live in New Zealand, along with Orcs (The biggest city is called Orcland- what a giveaway!)
Alisa, those people are the average people of England, i would guess- the same ones who want to get out of Europe. I think Paul is advocating common sense.
Durn! And possibly Gaw! I am overset.
“Contrary to what some people may have been told (and believe in all good faith) the Euro has nothing to do with gold.”
Being mostly a fixed value – let’s forget the ECB managing in recent times for a moment – the Euro works like gold for several countries. Cannot be deflated.
So Johnathan Pearce is in essence criticizing gold* and praising inflationists like Warner? writes LuckyLucky?
No I am not praising isolationism (and I am not even sure that Warner deserves that title). Warner is arguing, rather cogently, that the euro was in essence a political project, a project to create a superstate via a single, monopoly currency (hardly the same as metals-based money with freedom of people to use what currency forms they want a la Hayek).
Luckylucky also claims that the euro cannot be deflated. I guess the people at the ECB who are being urged to engaged in a massive round of quantitative easing haven’t got the memo on that. And a lot of the people who are in favour of the euro certainly think it can be treated this way. It may well be that the structure of how the euro is set up makes it harder than some might hope to impose a massive monetary stimulus, but it does not make it impossible.
“fixed value”?
“works like gold”
The doctors are right – I should not waste my time reading threads, I should go for a walk or clean the house.
Besides what I read on threads is often not worth reading anyway.
Still I liked what Nick Gray said – New Zealand sounds good, in spite of the Orks.
Same size as the United Kingdom – with less than a tenth the number of people.
I am sorry for being cruel in relation to luck lucky – and I am not just saying that, I should not have been nasty.
I am just sick of people repeating (in good faith – I do not deny that) the lies they were told about the Euro.
The breaking of “the rules” started ages ago (not just recently) The rules were never worth the paper they were written on.
And they were not sensible rules anyway.
I do not care what commodity people choose to as money.
Choose copper or silicon if you want to.
But do not tell me this “represents”….. or is as “good as” ……
I am old, and not in the best of health, and I do not want to be told (even told in total good faith) a load of crap.
Either something is a commodity or it is not.
Either something has economic value (yes I know economic value is subjective – that does not alter anything in this areas) BEFORE it is used as money – or it does not.
If something does not have economic values BEFORE it is used as money, I am not interested.
And, to be blunt, people who are interested (who go into this stuff – in spite of being warned again and again and again) deserve all that happens to them.
Excuses not accepted Paul Marks.
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“Luckylucky also claims that the euro cannot be deflated.”
Where i said that? I just said that for most European countries in the Euro, it worked as Gold because their Governements could not deflate. It had to be done via ECB.
“No I am not praising isolationism (and I am not even sure that Warner deserves that title).”
Where i talked about isolationism? I talk about inflation and you change it for isolationism?
The best point about New Zealand being Middle-Earth is that the home of the Gods and Champions was just to the West…
Luckylucky, when you wrote “cannot be deflated” I presume that you actually meant “inflated”. There’s not a government on the planet which has any interest whatsoever in deflating its currency; in fact, their pet economists fill the media with scaremongering about the supposed evils of deflation. (To the contrary, modest deflation is a positive good for everyone but debtors.)
But assuming it is inflation you were actually talking about, you’re still not really correct. It is true that the semi-sovereign governments within the EU cannot unilaterally inflate their own currencies. But the ECJ has just ruled (did anyone really expect anything different?), and Mario Draghi is now putting into practice, that the ECB can inflate its currency pretty much at will, emulating the US Federal Reserve. So while a few weeks ago one could have plausibly (if gullibly) argued that the euro imposed constraints on politicians’ ability to debase their currency, and thus acted somewhat like gold in this respect, that is no longer the case. The beast has slipped its tether, and there is no getting it back now.
Laird — Good job.
Laird, i mean deflated the money value, in loosing its value. Sorry for confusion.
“So while a few weeks ago one could have plausibly (if gullibly) argued that the euro imposed constraints on politicians’ ability to debase their currency, and thus acted somewhat like gold in this respect, that is no longer the case.”
I also presented that exception before if you read my “let’s forget the ECB managing in recent times for a moment”. Affirmation which didn’t even included the novel QE – the ECB was already buying debt.
So i think there is no real disagreement.
Luckylucky, if you’re going to comment on economic matters you really need to use the terms of art correctly. Inflation is what causes currency to lose its purchasing power (i.e., its “value”). Deflation is quite the opposite.
But I do agree with your other point.
Inflation it is what happens to the price values not to the currency value. The prices of products/services inflate while the currency value deflate.
‘Inflation’ used to be understood as an inflation of the supply of money, as with colonial Spain and the silver of Potosi, and gold from the ‘Indies’.
The inflationists, aka Keynesians, have largely succeeded in muddling the distinction between an increase in the supply of money, and an increase in prices. Indeed, from the modern financial media, one might think that ‘inflation’ is an invisible Dragon that can only be banished by ‘high’ interest rates, not as a monetary phenomenon.
Luckylucky, I repeat the first sentence of my last comment. See also Mr Ed’s correct explanation.
Thank you both.
But if inflation is just the increase in money supply then there is no garantee that it causes the currency to lose its purchasing power, if for example the economic growth is bigger than that increase of money supply.