You should have listened to me, idjits...
Posted on 04/29/2010 3:29:44 PM PDT by GOPGuide
MILTON Friedman was notoriously sceptical of the euro, predicting it was "going to be a big source of problems, not a source of help". When crisis hit, monetary union would prevent the eurozone countries from adopting solutions tailored to their individual circumstances. As large fiscal transfers between countries became necessary, old enmities would resurface and the edifice would collapse. Though Friedman was not one to rejoice in the misfortunes of others, one can imagine a wry smile as he watches, from wherever he may be, the European debacle, in which the euro bears a central responsibility.
Without the euro, Greece would have paid far more for its loans, and would have had great difficulty indebting itself so heavily. Equally, the euro allowed Spain to have twice the wages growth of Germany without facing a severe balance of payments crisis.
Not that the euro's founders were unaware of the risks. Hence the tough fiscal rules built into the Maastricht Treaty, binding countries to budgetary virtue and preventing any one country from being required to bail out another.
Start of sidebar. Skip to end of sidebar. .End of sidebar. Return to start of sidebar. But rules were made to be twisted, with Germany and France abetting (when they were not pioneering) creative interpretations of the fiscal constraints. The treaty's threat of huge penalties for budgetary lassitude proved ever less credible as the gamekeepers were themselves busy poaching.
Little wonder the situation deteriorated, leading to the present crisis and to a bailout that lacks transparency and seems unable to handle spiralling difficulties in Portugal and Spain.
Moreover, that agreement, against the strong advice of the governor of the European Central Bank, brings the International Monetary Fund in to the management of the eurozone. It is as if Canberra had to turn to the IMF to resolve a fiscal crisis in Tasmania.
You should have listened to me, idjits...
Btw, he was in the minority of economists who predicted disaster for the euro.
The Greek Tragedy awaits every nation that cannot control its spending and allows unions to sit at the public trough of tax revenue.
Good thing this is not an American problem.
Friedman was also correct about NAFTA, also...as it was managed trade and would not work. Somehow I think Friedman knew this Global economy stuff, as it is being practiced, would not work
I'm fairly sure he's spinning in his grave at a pretty decent rate at this moment...
But he was in the solid majority of Austrian school economists who predicted disaster for the euro.
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