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Can penny pinching Germans co-exist with free-wheeling Italians & Irish Gentlemen?

This blog prophet Edward Hugh said no – the demographics of free spending exhuberance don’t mix with those of the penny-pinching oldies and even the IMF are courting his views.   His blog is here and worth a look – one of his followers is Brad de Long!  Hugh is an interesting guy who is thoughtfully introspective.  He respects non-human life for example.

His central economic claim is that the European Union cannot survive because its demographics differ.  That  is not a new view however and a special case of a more general view.  A monetary union amounts to having fixed exchange rates between locally issued currencies even if you give them the same name.  This means that the monetary stances of different countries must be co-ordinated and that is tough to achieve when monetary outcomes are part determined by private sector actions. I recall that Robert Mundell made similar observations in the 1970s.

4 comments to Can penny pinching Germans co-exist with free-wheeling Italians & Irish Gentlemen?

  • observa

    “This means that the monetary stances of different countries must be co-ordinated and that is tough to achieve when monetary outcomes are part determined by private sector actions. I recall that Robert Mundell made similar observations in the 1970s.”
    They are being determined by private actions right now Harry, because of the bankruptcy and collapse of the Keynesians everywhere as this bloke notes-
    http://www.atimes.com/atimes/Global_Economy/LF11Dj01.html
    The only question now is when will the total rout occur and how devastatingly swift it will be? All the signs are ominous.

  • derrida derider

    Yep, this is all exactly the point that critics made about the euro when it was being mooted – google “optimal currency area”.

    The Euro was always a device that made far more political sense than economic sense – as many economists within and outside Europe pointed out at the time.

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