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we do use currencies

Indeed we do. But what examples are there of currencies that are not issued by sovereigns? The point about OCA theory is that it shows little interest in that. Mundell's theorising about it posited, one might think provocatively, that a nation state such as Canada might profitably be divided into two OCAs, East and West. This is not going as far as Hayek, (currency issued by private commercial concerns), but it is a neoliberal ploy to separate currency creation from sovereign nation states.

Whether it is workable or not depends on whether one thinks it possible for a non-sovereign to issue fiat currency. That is the experiment Europe is currently engaged in, and the outcome doesn't look too good. Building a single sovereign out of the multiple sovereigns of the EU should have been the horse before the cart. Instead of which, we have multiple sovereigns deprived of monetary and fiscal policy, and a non-sovereign attempting to enforce an OCA by means of "rules".

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 20th, 2015 at 01:10:41 PM EST
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Mundel grew up and went to grad school while the USA was on either the gold standard or the Bretton Woods 'dollar' standard with the dollar pegged to gold. It was the emanence of major gold flows in 1971 that compelled Nixon to 'close the gold window' and stop the exchange of dollars for gold. Mundel had proposed raising the peg to $45/oz to Nixon during a long plane flight during the '68 presidential campaign, but Nixon was too distracted to listen. Even so, raising the peg for gold would have been a hard sell. The very idea makes most 'gold bug's' heads explode. To them it undercuts the very point of a gold standard while appealing to the 'common sense' of a majority of the electorate.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 20th, 2015 at 01:23:43 PM EST
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