Monday, December 12, 2011

What is the positive and negative side of using a single currency Euro?

European Union has taken Euro as a single currency. What is the benefits and negative sides of this single currency?|||Benefit of single currency:


* Exchange across the member countries do not need conversion of currency of each country.


* Goods and services can move and exchange among the member countries easily.


* Repayment is easy and does not need any real capital transfer.


* Requirement of foreign exchange reserve is much less.


* share of debt payment for any single member can be help out by the others.


* together currency become strong in the international currency market.


Negative side:


* Weak currency sustained at the cost of strong currency.


* Strong currency member with good BOP condition has to suffer.


* Single currency of any member has no legal entity.


* Weak member economic crisis has to be shared and solved by others.|||Negative effect is that it enables governments and the banks to rip off the population by way of fractional reserve banking. This gives the government a market for its debt, because it bases the currency on "assets", being government bonds, being government debt. It gives the banks a licence to print money, because they can get paid interest on loans they make that are unbacked by deposits of money. The newly-created money doesn't reach everyone at the same time, and those who receive it first have an unfair advantage compared to everyone else. The new money goes to big corporations. So it's basically a completely unjust system by which big government, big banks and big corporations exploit everyone else who pay through constantly rising prices.





However these same negatives affect any fiat currency or fractional reserve banking within a single country.





The solution is simply to abolish government control of the money supply. The result would be the people's first choice, their real choice for money, namely precious metals and certificates of deposit. Money is a market phenomenon; there is no need for government to supply it. What we have now is just money socialism, and it doesn't work any more or better than food socialism.





A free market in money would provide a single currency, there would be no exchange rates because the market would equilibrate the price of money as gold or silver or copper. It would enable a free trade zone the same as the Eurozone. And this would control ballooning government debt, because any government that tried going into excessive debt would find gold leaving the country, thus restraining its spending. (At present, governments can go into debt and expect to be bailed out by the central bank forcing everyone else to pay.)





Of course the establishment would scream that gold is not practical. All we need to know about that argument is that they claim that by printing money they make everyone better off. They don't. All they do is redistribute wealth *up*. The Euro is basically legalised fraud by governments in cahoots with banks.

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