There are two different sorts of economy in the Eurozone, which I can characterise (because I'm the one writing this) as Northern and Southern. They have separate financial policies, because they're separate countries, but they are governed by a single set of interest rates and exchange rates, because there's only the one currency. The only solutions to this inherent contradiction seem to be either to bust the whole thing up and go back to pesetas, drachmae, lire and escudos, or to muddle through somehow: which is the option currently being leant towards. Both ways will lead to catastrophe.
So, how about the middle road? Instead of fissiparating the Euro into seventeen old currencies, how about two? We can call them the Seuro and the Neuro, if you like. They get exchanged at a rate of 1:1 on the cutover date, then they go their own separate ways. I haven't worked out the details yet, it's only nine-thirty, but I can't see any insuperable problems. The Americans will be a hiccup, but heck, it's all their fault anyway; and the Irish'll just have to decide whether to jump into the Atlantic or the Med.
I know little about finance, except that 'murky' seems to be the best adjective'. But I love the originality of your idea. And I particularly like the idea of Ireland having a choice!
ReplyDeleteYes, that should work. They've had a similar setup in the Caribbean since 1976 when the Eastern Caribbean $ was fixed to the US $ at 2.7 & has been ever since. And look where it got those islands - beaches, sunshine, coral reefs, great music, rum punches, happy people.
ReplyDeleteCan't the whole world do this, I think it's called fixed currency exchange rates? Oh, what would the poor currency speculators do? I hear someone ask.
They could be given lots of alternative stuff to speculate in, that don't ruin economies, corrupt politicians, distort society etc. Such as used teabags, barrelled mosquitoes (a lucrative commodity when traded against barrelled midges), non-convertible gold, cloud formations (pictures of, perhaps, otherwise too nebulous) etc.
Then money could be left to do its proper job of being a record of payment for goods & services.
"Democratic governments worldwide must establish a new global financial architecture, as bold in its own way as Bretton Woods, as bold as the creation of the European Community and European Monetary Union. And we need it fast."
George Papandreou March 2010
Fiat "let it be done"
Sterling idea! - but you're Seurof its acceptability? Any tampering with the status quo makes me quite Neurotic.
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