Friday, June 1, 2012

Abandoning Europe's Modern Gold Standard

Under Keynes’s tutelage, Britain’s currency, Sterling, was in 1933 revived as a money managed by the Bank of England and protected from speculative and vested private financial interests. Then in 1934, President Roosevelt freed the dollar, and with it, the people of the United States, who then embarked on a period of sustained recovery. Sadly, Germany maintained the dictates of Gold Standard economic policies throughout the 1930s – and we all know the political consequences of that incompetence.
If Europe were now to abandon the Gold Standard-type policies that underpin the Euro, Europeans would feel the full force of private wealth’s anger, through allies in the media, academia and politics. But this will follow from fear – not reason.
So, European leaders, be as bold as Keynes and Roosevelt. You have nothing to lose but the ‘gold fetters’ that deny the people of Europe economic and democratic sovereignty, and that chain you to the interests of private wealth.
There is however, everything to gain from European convergence, prosperity, unity and peace.”
Read it at Debtonation
An open letter to the leaders of Europe: Abandon the Euro's 'gold fetters'
By Ann Pettifor

Many people are finally coming around to the notion that a common Euro currency is effectively the same as a gold standard. By removing each country's sovereignty over their currency, the Euro vastly limits the options by which countries can enact counter-cyclical fiscal or monetary policies. The gold standard proved, on numerous occasions, that in times of crisis countries will ultimately abandon the commitment. This crisis will prove no different as countries will defect from the common currency. These actions, however, should not devalue the gains from convergence in trade and labor mobility. Protecting the European Union, while abandoning the common currency, should be the top priority.

Related posts:
Chidem Kurdas - "free trade and markets matter much more than the euro"
Ending the Euro Currency, Not the European Union

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