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South America might turn out to provide a test. Many countries there are trying to protect themselves from the depredations of Dollarworld. Or, if the Euro continues on its present course an opportunity to try a union based on better foundations and principles may emerge. But, of course, the biggest danger any society or group of societies face with their monetary system is having control of it hijacked by financial elites and the use of it perverted from the development of the society or societies to the enrichment of the few. That, effectively is what has happened in the USA, the UK and in the Eurozone.  

The Latin Monetary Union lasted for more than 50 years despite having a bi-metalic standard for the first 13 years and having the problem of some countries issuing bank notes based on union standard coins. World War I effectively ended the union but there were reasons it endured so long as it did. Having standards of weight and purity of coins amongst numerous countries was seen as facilitating trade, at a minimum.

The USA at its founding was a collection of sovereign states somewhat comparable in size and economic diversity to the states of the Latin Monetary Union but it became a de facto monetary union with the adoption of the US Constitution and had two national banks over different periods until 1836. I suppose we could have continued with just the National Bank system established during the Civil War, augmented by private clearinghouses, but the creation of the Federal Reserve System on the eve of WWI greatly aided the US in financing that war. Despite the actions of the Fed from 1928 until the appointment of Marriner Eccles, I shudder to think of managing such recovery as we had during the Great Depression under the old National Bank system, let alone trying to finance WWII without the Fed.

Under current policies in the EMU I don't see the peripheral countries enjoying ANY net benefits from the union and it seems that more and more members will fall into the status of Ireland, Greece and Portugal. But I don't see any of them as having sufficient weight to thrive alone, though I may be wrong. Hence my proposal. I just wish I could see even as good a potential solution to the problems the USA faces.    

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Sep 21st, 2013 at 10:17:22 PM EST
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