You’ve heard that the Euro was created to provide two benefits for Europe:
1. Unite Germany, France and other countries in a peaceful political situation, to prevent repeats of World War I and II
2. Create a macro-zone to compete against the economic strength of the U.S.
So how did we get to this … austerity and meanness of spirit, as typified by the grim expressions sported by German Finance Minister Wolfgang Schäuble in talks with Greece?
Because the Germans don’t view the Euro as a utopian idealistic way to help promote peace and prosperity for all of the EU nations.
Instead, Germany sees the Euro as a way to weaken its currency to increase exports. As Ben Bernanke notes today:
Germany has benefited from having a currency, the euro, with an international value that is significantly weaker than a hypothetical German-only currency would be. Germany’s membership in the euro area has thus proved a major boost to German exports, relative to what they would be with an independent currency.
Moreover – in a little-known slice of history – the Euro was really created for very different purposes than peace in Europe or competition against the U.S.
Specifically, this guy – a North American named Robert Mundell – is the father of the Euro:
Mundell is not the least bit European. Born in Canada, Mundell taught at the University of Chicago for 7 years, and has since taught at Columbia University in New York for more than 40 years.
But didn’t Mundell create the Euro to help Europe?
Not according to Guardian, Independent and BBC investigative journalist Greg Palast, who explained in his book Vulture’s Picnic:
Who spawned this cruel little bastard coin?
I called its parent, Professor Robert Mundell. Mundell is known as the Father of the Euro. The Euro is often spoken of as a means to unite post-war Europeans together emotionally and politically and to give this united Europe the economic power to compete with the U.S. economy.
That’s horseshit.
The Euro was invented in New York, New York, at Columbia University. Professor Mundell invented both the Euro and the guiding light of Thatcher-Reagan government: “Supply Side Economics” or, as George Bush Sr. accurately called it, “Voodoo Economics.” Reagan-Thatcher voodoo and the Euro are two sides of the same coin. (Ouch! Some puns hurt.)
Like the Iron Lady and President Gaga. the Euro is inflexible. That is, once you join the Euro, your nation cannot fight recession by using fiscal or monetary policy. That leaves “wage reduction, fiscal constraints (cutting government jobs and benefits) as the only recourse in crisis,” The Wall Street Journal explains with joy—and sell-offs of government property (privatizations).
Why the Euro, Professor? Dr. Mundell told me he was upset at zoning rules in Italy that did not allow him to put his commode where he wanted to in his villa there. “They’ve got rules that tell me I can’t have a toilet in this room. Can you imagine?”
I couldn’t really. I don’t have an Italian villa, so I cannot really imagine the burden of commode placement restriction.
The Euro will eventually allow you to put your toilet any damn place you want.
He meant that the only way the government can create jobs is to fire people, cut benefits, and, crucially, cut the rules and regulations that restrict business.
He told me: “Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.” Besides bowl location, he was talking about the labor laws, which raise the price of plumbers, environmental regulations, and, of course, taxes.
No, I am not making this up. And I am not saying the Euro was imposed on the Old Country just so the professor could place his toilet at a place of maximum pleasure. The Euro is fashioned as an anti-regulation straitjacket that would eliminate gallons-per-flush laws, flush away restrictive banking regulation, and all other government controls.
Now does the destruction of Greece’s sovereignty make a little more sense?
As Palast pointed out in the Guardian:
The idea that the euro has “failed” is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do.
***
For him, the euro wasn’t about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.
***
And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.
***
Far from failing, the euro, which was Mundell’s baby, has succeeded probably beyond its progenitor’s wildest dreams.
In other words, the Euro was intended to impose a Shock Doctrine straightjacket on Europe, where the big banks are stripping Greece and other countries of their public assets, pillaging, plundering and looting them of their natural resources and wealth.
Postscript: Mundell is also the creator of supply side economics … also known as “trickle down” or “piss on the poor” economics.
Many of Reagan’s top economic advisors subsequently admitted that supply side economics don’t work to help the economy. See this, this this and this. (Washington’s Blog is for free market capitalism … but supply side economics is crony capitalism, not free market capitalism.)
Moreover – as Martin Armstrong has warned for decades – letting countries like Greece join he Euro without first structurally adjusting their debts was a recipe for disaster. For example, when the Euro double in value a couple of years ago, Greece’s debt doubled in real terms. That’s when Greek really started sliding towards crisis …
So the wealthy nations like Germany – intentionally or unintentionally – and the other wealthy nations laid the groundwork from the start for asset stripping in Greece and other indebted states.
Indeed, Armstrong and Nigel Farage (member of the European Parliament and leader of the UK Independence Party) say:
The Greek people never voted to enter the euro … it was forced upon them by Goldman Sachs and their politicians.
Things are going so fucking well in the EU that of course, this is now being pushed:
http://www.bloomberg.com/news/articles/2015-07-19/france-s-hollande-prop...
I have been here for almost 4 years now. When i started reading ZH i often found interesting articles with lots of insight and interesting ideas, and the best part was often some stuff one could find in the comments below, from those who had insight into the issues being discussed and related material.
That is much more rare now.
Here is some real good insight... all the superpowers have been working together with the Annunaki... see their 'leaked' NWO intranet website, it is a shocker! Astonishing photos of the Annunaki posing with the Elite!
http://revelation12.ca/?p=2089
https://www.ecb.europa.eu/press/key/date/2002/html/sp020509.en.html
The horseshit is the article itself.
This blog claims to be about sensible economics, and yet it takes, verbatiim, the ravings of the far-left Guardian? That's like having Paul Krugman as your economic advisor!
Supply-side economics is not the problem - joining a common currency without understanding the consequences is the problem.
Here's the real issue: "Moreover – as Martin Armstrong has warned for decades – letting countries like Greece join he Euro without first structurally adjusting their debts was a recipe for disaster."
Yes, of course a common currency is s straitjacket for the member states, and that is the reason why, especially under/after Thatcher, the UK was strong enough and smart enough to stay out of the Euro.
The Greeks made a deliberate choice - cheat in order to join, and take advantage of lower borrowing costs in Euros. It's like lying on a loan application - if you can't afford the loan, you will eventually get into trouble.
The US Dollar is a straitjacket for the member states, too, but it was recognized from the beginning, which is why the US states all have constitutionally mandated balanced budgets. Those which cheat will eventually go bankrupt (like Greece), when they can't borrow any more.
You can't blame the bankers and/or the Germans for this, unless you suggest that one evil professor with a toilet problem is smarter than all the economics ministers of all those countries.
Oh. and about those regulations - far from forcing individual countries to deregulate in order to reduce the cost of government, the super-government in brussels spews forth nonsensical regulations continuously. (But there, again, so does Washington)
Mundell sounds (and looks - thanks for the pic) like H.G. Well's Dr. Moreau.
The lack of fiscal integration and adequate transfer mechanism within the EMU does look suspiciously like a feature, not a bug when the Germans are selling austerity like their true religion.
Missing from this (entertaining) article, as well as most discussions on the never ending crisis, is what came before agreement to the common currency. Re-unification of Germany.
The politically correct script reads the above points 1. and 2., as in - an economic union is the ONLY thing that EU members can agree on, so utilize this common ground by single currency issuance to ensure peace; creation of a counter-balance to the US and the USD.
It should be noted that the depreciation of the Deutschemark was caused by re-unification. It is also widely recognized that the go-ahead for re-unification was contingent upon Germany's eventual adoption of the EURO as brokered at the time by Jacques Delors.
True, adoption of the EURO has served to continue suppression of the exchange rate, favoring German exports, but this re-unification/Euro adoption deal was meant to limit the power of the Bundesbank and the Deutschemark, then viewed as a threat to the rest of Europe.
Has this strategy back-fired?
The strait-jacket which is the Euro has had many ill effects - forceful internal devaluation suffered by PIIGS, the worst.
Thus one of the problems of fraudulent "money".
From the looks of the results the euro has replaced a bunch of different governments with one that serves nobody but the ones controling the euro. All those folks using the euro are subjects to it. As control systems go the coin is one hell of a racket. How can there be any doubt what a fiat coin was meant to do? Its actual value is arbritary ie made up at whim.
Duh!
Good topic GW!
Yea, Euro-peons need the Euro because there are too many regulations on toilets.
That's about what I got from that article.
"Crisis Was Baked In from the Start"
Maybe thiss, too, will pass when enough people get tired of being manipulated.
http://fee.org/freeman/detail/beyond-crony-capitalie gsm Beyond Crony Capitalism
whatever happened to the AMERO?
The Amero comes after the signing of the secret TPP and the other secret trade deals. Don’t worry the North American Union central planners are in control.
>> little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain. <<
The horror. The unspeakable horror.
Knucklehead, they "privatize" by buying the assets at firesale prices after bankrupting the country.
While we're thinking of privatization, and while we're trying (in the article) to call Thatcher's remarkable turnaround of Britain 'voodoo economics', let me remind the readers that the entities sold off by the British government had no business being in government hands in the first place, AND the shares were sold to the public, generating a great deal of wealth for the middle class.
Who is "they," Genius?
"they" are those who buy the companies, and get rich off of the trades. I am all for government protecting rights. But I am not for the unproductive getting to skin the public in these deals. This is what happens when government takes on things it should not. There is a lot more to say on this subject but I am on a cell phone.
And replace it with ....??? a more profitable
"So how did we get to this... austerity and meanness of spirit, as typified by the grim expressions sported by German Finance Minister Wolfgang Schäuble in talks with Greece?
...Because the Germans don’t view the Euro as a utopian idealistic way to help promote peace and prosperity for all of the EU nations. Instead, Germany sees the Euro as a way to weaken its currency to increase exports."
Shouldn't "austerity" (i.e. not giving PIGS free money to buy german products) hurt german exports?
Soros has to sneak around, with "bodyguards".
Are you clear?
Mundell....how many father does the Euro have?
Helmut Kohl, Francois Mitterand, Ottmar Issing, Theo Waigel, Robert Mundell.....the line for sure is much longer.
Seems that the spouse had a bit on the side....
At least bankster Mr. Issing and former finance minister of Germany Mr. Waigel - in prior years preening themselves daily over their faitherhood in the medias - nowadays can't remember having ever conceived a child called "Euro":...
So where is all the deregulation? I'm not seeing it.
I know, and also where is the discipline since they are doing QE in Europe too. The toilet story was hilarious and I can relate to it, but the rest of the article has me scratching my head.
Euro was a fucking dumb idea, and obviously so, if were meant to sensible economics for all the nations. But its purpose was entirely different. Inevitably the strongest and most developed economy at commencment was and is the winner, but that was never a surprise.
Like trickle down economics, a massive con.
The trickle down part is the con. Actually, it was gush down.
Mundell the father of the EUR? hilarious
you could as well argue that Keynes was the father of the EUR, when after Bretton Woods all western currencies were pegged to each other and to the dollar, while the dollar was backed by gold
nah. if you squint your eyes and don't let you get blinded by all this propaganda, you'll see two things:
- first, that the EUR is several national currencies pegged together. as simple as that. the same way Hong Kong pegs it's HKD to the USD. reflect on why HK does it. reflect why all western currencies were pegged together, after the war. reflect why they were pegged together through the gold standard before
-second, that the ECB is the HQ of several national banks cooperating in their monetary policies. that simple. why do tuna swim together? why do you find fish in schools, and wolfes in packs? it's a monetary alliance. what are alliances for? how do you discern a defensive from an offensive alliance? in which currency are oil markets, btw, and what do China and Russia say about that?
the neo-leftist propaganda machine feeds from the neo-keynesian propaganda machine and vice versa, while both get further ammo from the neo-liberal
one riddle for you:
if Country F enters a gold standard with one Florint being honoured with one gram of gold, and Country D does the same with it's Ducat...
... aren't the Florint and the Ducat de facto pegged together? where is the business for the moneychanger, in this case? it's... gone
oh, you say markets are a good thing, always even when they are actually not needed? well, do you have any unrigged FX/gold markets around on offer?
Dang, thas just like duh Fed.
then why don't you have 12 currencies, in the US? or ask for a "break up of the USD"?
you don't seem to understand the word national, btw. a hint: it implies own armed forces, among other things like taxes, budgets and debt fuelling them
Well It is clear that the euro does not fulfill the criteria of his own theory of " optimal Currency zone", so it is no surprise at all.
The euro is the delusion that some uebermenschen can be trusted to expand the money supply when advantageous without malfeasance. The euro presumes all cultures handle money equally. In the US, Bryan said, "you cannot crucify man on a cross of gold," because he wanted an expanding money supply.
The euro crucifies the PIIGS on an iron German cross.
Every aspect of the EU and in all its prior formats from the ECSC and EEC have sought to do nothing other than to pursue the anti-European ideology of their Jewish founding fathers.
http://englishnews.org/news-central/resources/resource-a-conclusive-repo...
love when a plan comes together
GW: your "analysis" and "reporting" are incomplete without evaluating Friedman's assessment of the Euro. From b4 the beginning. He was only wrong in betting on the under, but then again, he was under the ancien regime's thinking about how finance got done.
I'm guessing that your "little known" history is even littler and lesser than what you present.
Comme d'habitude, don't cha' know.
- Ned
And this article bashes the Reagan economy and Thatcher's... It seems to forget that Reagan was a student of Friedman's policies = supply side economics. Also throw in the Austrian School with that.
Thanks, didn't know about Friedman's warnings against the Euro. Very interesting reading.
this should explain a few things about the euro & the US Bank string pulling in the background
https://www.youtube.com/watch?v=nnyHtPxBZn0
communism by the backdoor.... just a bit
Communism definition: A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.
Central banksters are not advocating communism. Indeed, the totalitarian fascist financial criminals advocate no publically owned property. They are buying public lands for pennies on the dollar as they enslave the population via representative debt.
The banksters are plundering criminals that want all that is valuable and to hell with the population, there are too many people anyway, let them starve. The criminal fascist central banksters hate any public support of the people. That is not a communist or a socialist and certainly not a democratic concept; it is a totalitarian criminal bankster cartel fascist concept.
Benito Mussolini in his book titled “The Doctrine of Fascism” defined fascist form of government as the merger of corporate monopoly with government. The bankster modern fascist should be branded as fascist, and no other, to distinguish them from representative democracy (government of, for and by the People.
Really? That is the definition of communism? You got that out of a dictionary? Is that the canonical, universal, standardized definition?
Last time i checked communism is everything one dislikes.
In reply to benjamin 123: I will take that comment as comical satire and laugh along with you. Ha. Ha. Ha. You should put in laugh lines so people well get the joke. Ha. Ha. Ha.
No. That's racism, Naziism, and the "far right."
Blah, blah, blah...
The solution is to let this era implode. It's going to happen.
Must happen. Needs to die. Period.
Not even going to comment further.
Bring it.
In reply to Ishit: You can always tell an ignorant and uneducated short haired monkey troll that can hardly talk with any substance or argument to present: the short-haired monkey screams ‘Bring it on” Ha. Ha. Ha.
I suppose the subspecies of short-monkey wants to scream something about not having any government. Ha. Ha. Ha.
I will bet you monkey boy, that you can’t string three correct sentences together because you will have about a 4th. Grade grammar education. Ha. Ha. Ha.
on the other hand, +1 for this comment.
those yellow stars should have six points...
The Guardian is leftist horseshit. The most ideologically knee-jerk and stupid major rag out there.
They try and paint the Euro as some kind of Thatcherite conspiracy - when in fact Thatcher was the most strident against EMU and European Government. She had to slap-down so many Pro-EMU members of the Tory party, like John Major and Geoffrey Howe, that she was eventually removed as leader of the Party.
Moreover, at the time, the Guardian was the biggest critic of Thatcher's opposition to further EU integration and a common currency
The Guardian are fucking hypocrites, but then again, they are socialists.
You cannot judge Thatcher by what she said as being equal with what she intended. All politicians are on record for saying what it takes to cover their ass and gain public support but behind the scenes they are fucking over everyone in every way possible to the benefit of a very select few. Case in point, Hillary Clinton . . . need I say more?
Bingo!
I said something very similar. The Guradian is about as reliable as Paul Krugman for an economic advisor.
Awesome!
when in fact Thatcher was the most strident against EMU and European Government.
A quote from Margaret Thatcher:
(A unified) ‘Europe’ is the result of plans. It is, in fact, a classic utopian project, a monument to the vanity of intellectuals, a programme whose inevitable destiny is failure: only the scale of the final damage done is in doubt.
I shall look up that quote and use it. Thankyou.