Thursday 14 April 2011

Euro And Gold Standard

Gold standard is a barbarous relic.

Gold standard has no difference from any kind of currency-peg system.  The single currency is just a currency peg in another form.

Greece, Ireland, Portugal and Spain, their problem is that they are tied to the Euro, which is nothing but another gold standard.

They will have to adjust prices internally, but their debt is still in Euro.  That is, wages have fallen, prices will fall, everything will fall except the debt burden.

Giving them finances in short-term will not solve the problem because they are already indebted, and these ECB IMF whatever stuff more debts to them.

How to solve this?

Either they leave the euro, or Germany and France should leave the Euro.  Just like when UK leaving gold standard after great depression.

No comments:

Post a Comment