The fix to the euro crisis

Bear in mind that while the disadvantages of single currencies are clear, they do offer massive and pretty obvious advantages too.

Back in the 1930s, the problem of protectionism was rife. Mercantile policies in which each and every country tried to outdo everyone else by exporting more and importing less created the conditions for a world war. In 1944, Keynes and most of the great and the good in the economic world congregated at Bretton Woods in the US. Keynes was the star of the show. He was after all a very clever man, and he proposed a system of international exchange, in which surplus countries were pretty much forced to buy more from deficit countries. His plan was rejected largely because the US contingent felt that this too clever by half Brit, who no one else really understood, had come up with wheeze designed to help one of the world’s largest deficit countries – the UK – and punish the world’s biggest surplus country – the US.

We got the IMF, World Bank and the Bretton Woods system of monetary exchange as compromises. It is a shame, because if Keynes’ plan had been accepted, the global crisis of 2008 may never have happened, and actually the US – which today is the biggest deficit country in history – would have eventually done very  well out of it.

Keynes’ rather selfish next move was to die. In death he attained a kind of demigod status, but by then it was too late. The course of history was set.

But within the euro area itself, Keynes’ ideas could be adopted. If they were, it is possible that the problems of imbalances could be solved, and the euro could survive.

In sport, no one wants to see every competition end in a draw, but for the game of international trade, a high score draw for exports and imports for each and every country may well prove to be the result we all need.

Also see the following related articles:

Is there hope for the euro? Catalonia’s rift with Spain
Spain’s woes are not down to debt
Catalonia’s strife; currency’s knife
Political shenanigans in Europe
The fix to the euro crisis

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