I don’t know if I’m on record at all about this, but I always thought the Euro was a crummy lousy stupid idea for the Europeans.
My reasoning is that of Jane Jacobs, in Cities and the Wealth of Nations: “Jacobs makes a forceful argument that it is not the nation-state, rather it is the city which is the true player in this worldwide game.” as Wikipedia has it. But a lot of people miss the real upshot of that treatise, which is that for every currency, a dominant city tends to emerge.
This has been somewhat masked in the United States, with its immense mobility and uniformity. It has been difficult for one region to come to dominate the others and thus benefit from the revaluing of the currency (down at times when the dominant city is relatively weak and up when it is strong). In Canada and Mexico, as in non-Euro Europe and elsewhere, the emergence of a dominant metropolis per currency has been obvious.
In America, the whole Northeast from Chicago to Boston to Washington forms a single metropolis with great mobility. Its only obvious competitors have been the two California conurbations. At this point, as commodities become dominant, the Texas triangle (including all five big cities) may emerge as the winner. But the game is still on.
In post-Euro Europe, the
Ruhr Rhine valley has always been a contender for dominance. The value of the Euro is thus set high because of the success of Germany. This strangles the Mediterranean, which is prevented from devaluing its currency and thereby promoting growth of local industries.
The absolute ungovernability of the Euro zone just means that the dysfunction of the USA as a modern state has been inherited by the United States of Europe. It’s cargo cultism: the advantages of the USA can never be implemented in Europe because of the plethora of cultures and mores. The Euro zone never made much sense, except as an effort to replace the dollar as the reserve currency of the world, which never happened, and as it appears now, a good thing.
The Euro treaty should be unwound, and local currencies re-established in Europe to re-establish quasi-normal economic activity for a while. Is that a good idea? I think it’s better than trying to glue together something which can’t function properly as a whole. And in the long run, Europe’s multiple currencies present a huge competitive advantage on Jacobs’ theory.
America, however, should not opt for fifty statewide currencies. America has an advantage in its capacity to inflate its way out of debt. That America has not eagerly opted for as much inflation as it can swallow is another aspect of its political confusion these days as far as I can see. Nobody else has their debt denominated in their own currency! Plus, inflation would greatly untangle the real estate mess, as the real value of the debt will shrink relatively quickly.
I must be wrong, of course. I can’t possibly understand these things better than everybody else. So I’m open to being set straight…