World Economy

Italy Might Leave Euro

The standard of living in Italy is at the same level as in 2000.The standard of living in Italy is at the same level as in 2000.

One of the leading German economists has suggested that Italy might leave the euro. The point being made by Clemens Fuest, of the Institute for Economic Research, is that the constraints of the euro have meant that Italian living standards have not risen since 2000. So why would they want to stay in such a system if it doesn’t achieve the basic task of any economy, rising living standards?

Ifo chief Clemens Fuest said that he believes Italians will reject the euro currency and return to the lira. He told Germany’s daily newspaper Tagesspiegel: “The standard of living in Italy is at the same level as in 2000. If that does not change, the Italians will at some stage say: ‘We don’t want this eurozone any more’,” Forbes reported.

It’s important to understand the underlying point here. Methods of economic organization exist so as to make the people better off. “Sure, we can add in secondary considerations, things like moves to ever closer European unity for example, but those are political matters. An economic structure, an economic policy, must be judged first and foremost upon its economic effects. And those, for southern Europe, have been dire as far as the euro is concerned.”

And why shouldn’t the populace demand economic arrangements which make them richer rather than those which feed the egos of the federasts? he questioned.

He also said that if Germany’s parliament were to approve a European rescue program for Italy, it would impose on German taxpayers risks “the size of which it does not know and cannot control.” He said German lawmakers should not agree to do this.

Quite so, and the method of avoiding the costs of the disaster that is the euro is to disassemble the euro.

For quite simply it has been a disaster. Monetary union, by definition, means that interest rates must be the same over the various economies. But the European economies simply do not move in lock step, they are not cycling through boom and bust at the same time.

Thus one monetary policy simply should not be imposed—and that means that one currency should not be. The euro has already led to disasters in Ireland, Spain, Finland and Greece and looks fair to cripple Italy as well. This is not a recommendation of an economic scheme—thus the economic mistake should be unraveled.

“Europe just isn’t going to get better until all realize that the euro was a mistake and a mistake we need to rectify. Rectify here meaning abolish.”

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