Quick comment.
Since the nations of the world, led by the example of the United States, aboandoned the gold standard, all of them have allowed their currencies to decay at a steady clip. We call it "inflation," perhaps a euphemism. My suggestion, we should call currency destruction what is is, "currency decay."If you understand this concept, you will understand the present problem with Europe.
In brief, the Deutsch Mark, if it stil existed, would rise relative to other currencies, as German monetary policy is less inflationary than that of most other major nations. Note - it is still inflationary, just less so relative to the policies of its peers.
In brief, this is why the European Monetary Union is failing. Greece has always permitted a rapidly decaying currency, as Greek citizens have a habit of taking long holidays, retiring at 60, not paying income and property taxes, and not even paying for government-provided services, including electricity. Similarly, Spain, Portugal and even Italy are "relaxed" when compared to the more industrious French and German economies.So what we are seeing now is currency decay to the point of outright "rot" in Greece, and quickening currency decline in Spain (with Portugal, Italy, Ireland and certainly others "following along").
How does one maintain monetary union in such a case?
In brief, it can't be done.
The nations with slowly decaying currencies must continuously bail out those that tolerate more rapid decay and outright decomposition, with Greece being the current poster child.
It's not fixable.
(Thanks to Hookedblog for today's images.)
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