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To: quidnunc
I don't quite understand it. If having one currency in the US doesn't adversely affect the some of the states, why the problem with one currency for most of Europe?
5 posted on 06/08/2005 7:55:47 PM PDT by Paleo Conservative (Hey! Hey! Ho! Ho! Andrew Heyward's got to go!)
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To: Paleo Conservative

Workers are free to move from job to job regardless of what state they're in here (one of many possible examples). In Europe there are many barriers to moving where the jobs are, one being language.


9 posted on 06/08/2005 8:28:36 PM PDT by DB (©)
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To: Paleo Conservative
I don't quite understand it. If having one currency in the US doesn't adversely affect the some of the states, why the problem with one currency for most of Europe?

We just don't think of it that way. Hypothetically, a State dependent on exporting goods would like a weak dollar, while a State serving domestic markets, or heavily dependent on financial and banking industires, might benefit from a strong dollar. If each had its own "dollar" they each could benefit, instead of one prospering while the other struggled.

10 posted on 06/08/2005 8:48:12 PM PDT by hinckley buzzard
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To: Paleo Conservative; conshack

The US has a broad and unifying set of laws and principles.
See my post#52 for a quote from the article that is pertinent to your question.

In Europe, there is an enormous gap between the different nations, both in those, and in their social "safety nets". Some of them have created a major deficit problem for themselves between that, and their union giveaways, and government pension plans, and such. I heard that Germany has pledged something like 46% of all it's income to retirement plans, for example (Caution: my numbers could be quite off there).

If, for example, Germany did this when their currency was floating, they would suffer major inflation of their currency, and though that wouldn't have much effect on internal trade, their international purchasing power would be lower. That is the price they would pay. When the currency is fixed with respect to a stronger economy, say, Ireland, that means Ireland ends up paying for Germany's deficits by their implicit supporting the currency.

With the US, our states' differences are not as vast, and yet there is still problems with people objecting, and leaving. For example: welfarers move to NY, because the welfare benefits are better than in Arkansas. Meanwhile, producers in NY move to TX, taking away NY's income source. This encourages more uniformity in their benefits - but not complete. Erie County's (and NYs) financial problems stem in large part from this - despite the very long time that this mechanism has been in place in the US. Fiscal discipline is forced on the states by these types of mechanisms. It is a rather tenuous mechanism, in my mind, but it does allow some "laboratory experimentation" with the costs and benefits of different types of law and social structure.

Europe's thinkers realize that they need much more similar laws/benefits in order for the Euro to work. That is what the EUConstitiution was supposed to provide. They realize that the various nations must commit to balancing their budgets, but France, Germany and others have now decided they aren't going to honor that agreement. They have promised far mor than they can now deliver. Any of the stronger countries should really fear unifying with them because now all they would be pledging is to involuntarily bail them out.

I believe that they went about this "Greater European" business totally backasswards - that they ought to FIRST gotten together for "national defense", THEN created an overarching set of laws/social/economic, THEN when there was some similarity --- the euro and done their "no borders"/full immigration stuff.

I further believe that those who imposed the euro on them had sufficient macroeconomic understanding that they realized that it would never work unless there was a much more unified Europe - and they were hiding that from the people because of the nationalistic instincts they feared the populace would use to veto such a sweeping move.

I DON'T understand MacroEconomics that much despite the study I've done, so this is just a take from a rube.


14 posted on 06/09/2005 8:32:50 AM PDT by AFPhys ((.Praying for President Bush, our troops, their families, and all my American neighbors..))
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