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Germany has resisted efforts by other countries to extract even more money from the German taxpayers.
It was clear from the very beginning that the Euro was not supposed a wealth transfer mechanism.
You are basiscally whining about not beeing able to steal more from us. If that's what Europe is about, this is not gonna work at all.
If Germany does not like paying for keeping the Euro, then Germany must pay its workers enough that they can import as much from other Eurozone countries as Germany wishes to export to them.
Current accounts surplus; no wealth transfer. Pick one.
You are basiscally whining about not beeing able to steal more from us.
No, you're whining about basic arithmetic:
Total exports to other countries + total wealth transfers from other countries to you = total imports from other countries + total wealth transfers to other countries.
And that's really not negotiable unless you want to abolish double-entry bookkeeping.
- Jake Friends come and go. Enemies accumulate.
Everbody has his own made up economic theory to explain why the most simple tenets of bsusiness, simple addition and subtraction don't apply any more. Instead we get drowned in fuzzy make-belive mathg that explains away basic tenetes.
You work hard and live frugal, you create wealth. You have wealth.
You spend and waste and idle and don't work - you go bankrupt and die poor.
What applies to your house applies, by simple iterative logic, also to a village, a city, a nation.
Thats the simple reality. Everything else is panicking make-believe and charlatanery.
Money is not wealth. It is not even a token representing wealth.
If Germany had accumulated real physical wealth instead of money claims on other people, we wouldn't be having this problem.
Instead it accumulated money, which has no value beyond the political power it commands, and is now attempting to claim a value that it believes the money should represent.
Swabian Housewife Economics.
A house that has a suitcase full of money in its basement but no car is richer than a house that has a car but no money. A country that has a vault full of money in its vault but no factories is poorer than a country full of factories but with no money.
This should not be difficult to understand, but apparently Swabian Housewife Economists have difficulty grasping it.
So, now, we abolish trade as well?
And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest. Which is practically the definition of wealth.
the basis of international trade is actually the mutual agreement that money actually does represent value, and thus, wealth.
No, the basis of international trade is comparative advantage. International trade does not require that money retain its purchasing power any longer than it takes the exporter to exchange his foreign currency with the importer's domestic currency.
For the purposes of foreign trade, you only need money to retain its value for longer than that if you want to run an aggregate current accounts surplus. Which your trading partners have no particular obligation to support or encourage.
Running a trade surplus is a form of industrial subsidy. Other people don't have any obligation to pay your industrial subsidies.
And your proverbial Swabian Housewife does not have the money in her basement - she has it in the bank. Where she gets decent interest.
In other words, the state pays her a subsidy for doing fuck all with her money. That policy creates no wealth. Not a single meter of railway is built because she has money in the bank. Not a single ball bearing is cast because she has money in the bank. Not a single ship is launched because she has money in the bank. Money in the bank has, quite literally, no economic function until it is spent.
Tell me again why money in the bank should pay interest at all?
That money in the bank is money the bank does lend to someone who needs money to create wealth. Economy needs credit.
And comparative advantage doesn't create trade any more than gravity creates rivers. Yes, it is a necessary precondition, but in real life, without money there is only very very limited trade actually happening.
Money is the abstraction of wealth and value, and a great facilitator for every kind of economics.
Denying money's existence or value is a sure sign of crackpot economics.
That money in the bank is money the bank does lend to someone
Loanable funds fallacy.
In the real world, banks create credit when someone borrows from them. They then turn around and get the central bank to sign off on that credit, thus turning it into legal tender.
There is no reason, save atavistic tradition, to even house deposit-taking and lending in the same institution.
Money is an abstract representation of state power. An important point of being a sovereign state is that you reserve the right to revoke this power from foreign parties (either through strategic default or inflation) arbitrarily and without notice.
That's what "sovereignty" means: That you reserve the right to revoke political commitments to foreign entities.
The very first example from the above wiki link:
In Keynesian macroeconomics, the "paradox of thrift" theory illustrates this fallacy: increasing saving (or "thrift") is obviously good for an individual, since it provides for retirement or a "rainy day," but if everyone saves more, Keynesian economists argue that it may cause a recession by reducing consumer demand. Other economic schools, such as the Austrian School, disagree.[
Insofar as economics is a scientific endeavor, therefore, Austrian moral theology does not qualify.
Like, as I've argued several times earlier, channeling all that surplus cash into buying out ENI, Iberdrola, Santander, UniCredit, all the Greek shipping companies et cetera et cetera. Peak oil is not an energy crisis. It is a liquid fuel crisis.
What applies to the finances in your house, village, and city does not apply to a nation, because the nation prints its own currency. It is a completely different situation, as is explained in tedious detail to thousands of college freshmen every year.
In fact, not even the Eurozone as a whole prints its own currency, because each Euro in existence is the result of the ECB president shitting a gold ingot. The Euro gold hoard is kept in Frankfurt by the Nibelungen. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
That is the most evidence-free statement about wealth I have ever heard. I know plenty, and I mean plenty of people who did exactly that and are now subsisting on 400 Euro pensions. This sort of way to create wealth, in the real world, is so rare as to be irrelevant. If you want to have wealth you inherit it, or steal it from someone, or set up fancy con-artist schemes such as Nth order derivatives etc. I mean take the Fortune 500 list of the wealthiest people on the planet, and see how many of those fit your description The road of excess leads to the palace of wisdom - William Blake
Of course not. You may create wealth to markets, but there is no guarantee, that the market returns you the wealth you created. You may i.e. pay all your surplus to a landlord.
Or something. It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
If German workers got paid enough to keep Germanys trade balanced, they could afford more holidays in Greece and the workers in Greece could then afford more industrial goods from Germany. Instead we get Harz in Germany to push wages (though they call it inflation) down and slaughter of jobs, wages and rights for workers in Greece. Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
Can you explain?
And in fact, unit labour costs in Germany have fallen in relation to those of other eurozone countries since the implementation of Hartz IV.
When you have an agreement to keep exchange rates pegged to each other, each side should be responsible from defending its own currency from appreciation, because trying to defend your own currency from depreciation is an untenable position. This is because you can always print more of your own currency to buy foreign currency, thereby devaluing your currency ("defending your currency from appreciation") but you cannot always buy your own currency with your foreign currency reserves, thereby increasing the value of your currency ("defending your currency from depreciation"). The recently established one-sided bound on the Swiss Franc's exchange rate is an example of this - the Swiss bound is unassailable if the Swiss Central Bank chooses to defend it. It will never run out of reserves, rather it will accumulate reserves, trying to enforce its stated policy.
Bundesbank refusal to hold its end of a stable exchange rate deal (granted: nobody made it explicit that it was everyone's obligation to defend their own currency from appreciation) ejected the Pound and the Lira form the European Exchange Rate Mechanism 20 years ago. The EU should have recognised that this made stable exchange rates within it unsustainable and stopped pursuing them as a policy goal. The Euro project should have been abandoned by the French side. Unfortunately for us all, the Bundesbank did defend the DM from appreciation when it looked like it was the French Franc that would be ejected next.
Therefore, contra your claim I quote at the start, the Euro is a huge wealth transfer mechanism towards intra-EU net exporters (notably Germany, but also the Netherlands and Finland) because it put all the economic burden of the fixed exchange rate regime on the shoulders of the deficit countries (which would naturally see their currency depreciate if if were allowed to float).
Keynes recognised that devaluation, deteriorating terms of trade and indebtedness are in themselves a penalty that deficit countries have to pay, so at Bretton Woods he proposed that, in order to restore a sustainable fixed-exchange-rate system (then the Gold Standard) this system would have to impose some sort of penalty on surplus countries. The US, then the world's exporter of last resort, "took the position of absolutely no". This is typical of exporters of last resort in international trade crises (see China and Germany at the G20 in 2009). tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
So the case you describe should just not happen because all countries run the same deficits.
Current accounts is the surplus/deficit that actually matters. This pathological obsession with inflation, government bonds and government spending is an Austrian-school cargo cult, not any form of economics conventionally recognised in the social sciences.
You cannot legislate recessions deeper than 3% out of existence. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
I would be very careful about using the term "steal" in the context of Greco-German relationships. First of all Greece was among the countries that helped German recover in the 1953 debt settlement (without which Germany would never have gotten back on its feet), and also Germany has never repaid back the forced loan that the Nazi occupation forces forced on the Bank of Greece, taking pretty much all of the gold in its treasury. The loot was kept by the FRG without repayment, pending reunification. After reunification it became "old history". This is not about war reparations (a separate matter) but about an actual debt, never repaid but never forgiven also by the Greek state. At this stage of Greco-German relations it is a sure bet that the (quite defendable legally I'm told) loan claims will be put on the table by the successor gvt, especially if it is of the left. The road of excess leads to the palace of wisdom - William Blake
It isn't "other countries" that "extract wealth" from the German taxpayer. It's European (and prominently German) banks.
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