The European Union not looking all that EU-ish at the moment
In times of crisis nations often rediscover their identities.
My guess is this bodes poorly for an EU that is already under serious - and well-deserved - pressure.
Creating a common currency amongst highly disparate economies was always a fools errand.
My guess is this bodes poorly for an EU that is already under serious - and well-deserved - pressure.
Creating a common currency amongst highly disparate economies was always a fools errand.
The EU is forced to give greater monetary policy weight to the economic powerhouse of Germany
This creates a situation of perpetual interest rate imbalance
Interest rates will be too low in countries where wages are rising and too high in countries where unemployment is rising
This creates a situation of perpetual interest rate imbalance
Interest rates will be too low in countries where wages are rising and too high in countries where unemployment is rising
This gives rise to another effect.
The stronger, more fiscally disciplined EU economies are not only subsidizing EU countries that choose to engage in more reckless monetary policy and actions – they essentially encourage them to do so.
The stronger, more fiscally disciplined EU economies are not only subsidizing EU countries that choose to engage in more reckless monetary policy and actions – they essentially encourage them to do so.
America has its banking institutions regulated at the federal level.
Each member country in the EU regulates their own financial institutions - and has their own central bank.
The ESCB does not have monetary authority.
Each member country in the EU regulates their own financial institutions - and has their own central bank.
The ESCB does not have monetary authority.
Our federal government makes up a huge bulk of our overall governmental spending.
Again, not so in Europe, where the EU’s budget is dwarfed by the governmental budgets of its member nations.
These differences are real and important.
Again, not so in Europe, where the EU’s budget is dwarfed by the governmental budgets of its member nations.
These differences are real and important.
As noted by Milton Friedman “It is worthwhile for a group of independent countries to adopt a single currency when (a) the economic shocks that hit the individual countries are similar and (b) labour is highly mobile among the countries.”
The United States generally meets this test.
The European Union with its varying languages and cultures – and lessened labor mobility – does not.
themarketswork.com/2018/06/03/the…
The European Union with its varying languages and cultures – and lessened labor mobility – does not.
themarketswork.com/2018/06/03/the…
