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... exchange rate risks at every provincial boundary crossing within the Eurozone plays havoc with planning production systems for fixprice output across provincial boundaries.

The Eurozone needs, at a minimum, an automatic allocation of Euros based on the size of the output gap, allocated to national governments in proportion to population. That would allow the pro forma national governments to maintain their safety net programs while working out a Eurozone-wide basic safety net.

Of course, for the corporate neofeudalists, the fact that the Eurozone is crippled as a monetary region without a corresponding fiscal authority is a virtue ... its faults are only faults when viewed through the prism of public interest, but are virtues when viewed through the prism of relative power of transnational corporations.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 6th, 2010 at 11:16:31 AM EST
The Eurozone needs, at a minimum, an automatic allocation of Euros based on the size of the output gap, allocated to national governments in proportion to population.

What, a cap-and-trade Euro bond market?

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 11:34:53 AM EST
[ Parent ]
Who said anything about marketed bonds? The ECB creates Euro reserves in accounts of the treasuries of the member states. Done.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu May 6th, 2010 at 12:22:06 PM EST
[ Parent ]
I guess that isn't buying debt or giving the governments an overdraft, is it?

Brilliant.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 06:14:31 PM EST
[ Parent ]
Some asset would have to be created to match against the liability. Of course, when a reserve banking system directly creates reserves, that is normally by dictating to the Treasury to issue bonds which the reserve bank holds. Where the reserve bank refunds income on bonds over interest back to the treasury, there is no net financing cost.

So they could be "warrants" from the EU or alternatively from the states whose accounts have been credited.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 6th, 2010 at 08:20:24 PM EST
[ Parent ]
... if it is an automatic ratio based on an automatic amount of purchasing power created, no, its not an overdraft.

The "need" to "borrow" at the level of the monetary authority is, of course, purely a decision made by the monetary authority, provided that there are unemployed resources to be mobilized.

That is, the role of the sale of bonds is the same as the role of taxes, to drain purchasing power from the private sector to essential government spending to take place without a demand-pull inflationary outbreak. Under current conditions, there's no danger of demand-pull inflation, so there's no need to sell bonds to drain purchasing power.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 6th, 2010 at 08:24:37 PM EST
[ Parent ]
Is this the time to talk about grey markets starving governments? Tax avoidance as a national virtue?

Governments don't work when starved. Just as corporate parasites can ruin economies.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Thu May 6th, 2010 at 09:54:59 PM EST
[ Parent ]

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