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First, the collapse of the Bretton Woods system of fixed exchange rates pegged to the US Dollar, and by proxy gold, presented the threat of competitive devaluation for intra-European trade. The experience of the 1930s, in which countries attempted to decrease the cost of their products in foreign markets through currency devaluations, haunted the policymakers of that time. Thus you get an attempt to restore a system of fixed exchange for intra-European trade after the loss of a global system provided as a public good by the US government.
Where there is no trust, how can you have a monetary union, let alone a political union?
There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
Friends come and go. Enemies accumulate.
Eventually one of the principal participants would bow out, the other would set whatever discount it wanted relative to the rate at which the former stopped defending its discount. You would have discovered the exchange rate which neither central bank could feasibly attack (and since the central banks, collectively, have greater pricing power than any speculator, by inference also from speculative attack).
Which suggest that perhaps Germany stepping outside the Euro causes less risk of an outbreak of competitive devaluation than forcing the peripheral countries out one by one.
I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
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