Out of the euro

[traelin0]

The euro is a very practical currency, but it makes millions of victims. This article contains a simple explanation why the euro can’t work and exposes the advantages of a shift to state money.

- No, European cooperation won’t disappear without the euro!

- And yes, with state money we are much better off!

The euro has an unsolvable problem. The countries that have severe debt problems today, if they succeed in reducing these debts by cuts in public spending, will predictably slide into debt again.

This is because these countries are victims of a fundamental flaw in the euro. Before the euro started, economists have warned, that a single currency can only work when all participating countries are economically homoge­neous. [1] [2] [3]

Today there is nothing that can prevent Greek consumers from preferring cheaper and better products from Germany. And when Greece imports more than it exports, its debts increase. The same is true for all less productive countries in the euro area. They can cut their public spending as much as they want and privatize all public infrastructures and services, but the next debt crisis will never be far away!

Here is why. When consumers in less productive countries prefer cheaper and better imported products, the external debt of the country increases, while the country’s productivity decreases. When the country has its own currency, it can devaluate it. This will make imported products more expensive and the country’s own products more competitive on the export markets. The debt will decrease and the productivity will increase again. Devaluations were very common before the euro started.

Read more here.