Euro: a currency in debt?
The letter from the lawyer Antonio de Grazia
Dear manager,
when it comes to the euro, the supporters are lined up: on the one hand the eurolyrics, and on the other the italexit.
Until the entry of the euro, our little Italy – when it needed liquidity – had two chances:
a) issue government bonds, with different maturities and remunerations, and therefore could borrow from third parties (including with the Bank of Italy, which supported the price with the purchases);
b) to print money, that is to say to create money from scratch (even if this operation could produce inflation, or lead to a devaluation of the lira, and the latter had the purpose of making our exports more competitive).
With the introduction of the euro, a bet is placed on the European future and on a homogeneous and standardized integration of the various national economies.
As is well known, the exchange rate between currencies "is the price of one currency in terms of another" (Antonio Martino).
“The adoption of a perfectly fixed exchange rate means renouncing the autonomy of monetary policy” (always AM).
In fact, the intrinsic value of a currency is the measurable strength of its national economy: if a currency is strong, this means that its national economy is in excellent health.
And the markets price, with the exchange rate, the value of the individual national economies. Italy, at the time of the lira, was subject to periodic devaluations.
But he had the right and the ability to exercise monetary policy independently.
Is the renunciation of monetary autonomy compatible with the concept of state sovereignty?
Sovereignty is the juridical quality of a Nation State, its being an original power independent of any other power.
The imperfect construction of the euro, the democratic deficit of the European Union do not seem to have understood the current imbalance.
The euro, a debt currency, is creating debt.
So it is if you like.
A warm greeting.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/euro-una-moneta-a-debito/ on Tue, 13 Oct 2020 08:05:31 +0000.