The Fading Promise of the Euro
By Randall Holcombe • Monday August 27, 2012 8:49 AM PDT • 4 Comments
When the euro was created in 1999 the new currency promised to facilitate trade within the euro zone, to further unify Europe, and to challenge the dollar as the world’s reserve currency. The common currency does facilitate trade, but the differing goals of the member countries seem to be creating more divisiveness than unity today. The promise of the euro as an international reserve currency has faded substantially as a result.
I recently saw evidence of this on a trip to the Republic of Georgia, which was a Soviet Republic prior to the dissolution of the Soviet Union, and which is now trying hard to strengthen its ties with Europe for economic and political reasons. Despite the desire for closer ties with the EU, the currency of choice in Georgia is the dollar.
Georgia’s currency is the lari, but I noticed a number of prices for big-ticket items advertised in dollars. Condos for sale listed their prices in dollars, not lari or euros. A Georgian I asked about this told me that for items costing under $100 transactions tended to be in lari, but for larger purchases prices were quoted in dollars and payment was made in dollars.
When the euro zone was established the European Central Bank was set up to be independent of the fiscal operations of the member states. Had this remained the case, the euro might be a potential challenger to the dollar in international markets. But politics has altered the European Central Bank’s mission and it is now messily involved in trying to address the fiscal problems of Greece and other eurozone nations.
The Federal Reserve Bank here in the United States can’t stand as a model for the European Central Bank after its interventions in the bailouts of banks and other financial firms in recent years, but it appears that the Fed’s interventions have harmed the dollar less than the European Central Bank’s interventions have harmed the euro.
Tags: Bailouts, Economics, Europe, Federal Reserve, Georgia, Money and Banking, Politics, Trade 
The Elitist Globalist drive for a One World Government,controlled by these same Elitists,has been going on for decades. The goals of the ECB,the EU and the European Parliament was a United States of Europe. The United States of Europe would eventually expand into a one world government with one nation after another giving up their sovereignty. This was supposed to be achieved thru the banking system,by way of a world central bank with a central bank fiat currency. The two mistakes made by these Globalists is 1st.In not realizing that there are vast differences in the economies,work culture and workforce of say Germany and Sweden and say Portugal and Greece. And 2nd. That political,economic and cultural nationalism is first in the minds of the various nation states of Europe. European tribes that later formed the nation states of Europe are not about to give up their sovereignty for the sake of being controlled by a third party elitist cadre of international bankers and money lenders. What has happened is that the socialist politicians of the various European countries have borrowed heavily to prop up their state controlled economies and their welfare states. Now the money is gone and the stronger economies of Europe are refusing to lend out any more Euros causing these various nations to go bankrupt and to eventually default on their loans. The answer is for these small economies like Greece,Spain and Portugal to abandon the Euro and return to their own currencies. Of course if Europe had a gold coin standard as it did for centuries,this problem would have never arisen. The goals of the globalists was that eventually all the nation states of the world would give up their sovereignty to the United Nations. As it stands today,the EU is run out of Brussels Belgium and is controlled by Elitist Globalists and their bureaucracies which is primarily made up of ex communist functionaries. Because of the above mentioned problems,the New World Order dream of a United States of the world controlled by these same megalomaniacs is coming unraveled. Thank Goodness.
libertarian jerry | Aug 27, 2012 | Reply
I wouldn’t go along with libertarian jerry’s somewhat flamboyant ‘global domination’ theory. I don’t even think it’s ‘elitist bankers’ who are seeking this ‘domination’. They’re mainly interested in making money. However, there is no doubt that the euro was born out of a political desire by the European Bureaucrats to create a federation of European States (if not a completely singular ‘nation’) that would be controlled effectively by them rather than by an elected government. And this plan might just be working. The way out of the Euro Crisis (if a situation that has been going on for nearly four years now can be called a crisis – more like a chronic indisposition in my book) they are saying, is to bind the European countries more closely together by controlling their individual budgets, fiscal policies and treasuries. They think that they can ‘stand up to the dollar’ and other reserve currencies that way. They have been shown to be badly wrong for the reasons jerry lists, but they are still dangerous. Thank goodness we in Britain kept out.
John Harrison | Aug 28, 2012 | Reply
I agree witrh John Harrison and would suggest the writings of the Austrian school for econmic reasons.
Ralph Eggen | Aug 29, 2012 | Reply