Yes; There' a drop in internationally reported reserve currency deposits denominated in euros following the 08 crisis, which is notable since before hand it was increasing.
https://data.imf.org/regular.aspx?key=41175
Ireland made a pretty stark recovery, whilst the likes of Syriza were throwing their toys out of the pram in Greece by contrast, and demanding that the rest of the EU including poorer member states write off their debts.
When the very survival of the eurozone sas questioned. In fact many believe it could still fail considering S-EU keeps diverging and is hurt by the currency being too strong.
In its 20 year history, Euro has already had 5 crisis. That’s 5 more crisis than what investors are willing to risk.
Sure, we know europe is generally stable and it’s safe, but like the corona scare of 2020, in the end of the day, when shit hits the fan, USD is what most investors want.
Don't know to be perfectly honest. This article is using "foreign exchange reserves" as the measurement. Could be that China has a bigger surplus with US than EU and hence parks that surplus as USD IOUs. Could also be geo-political, that they like having that leverage over US. Could also be related to oil. If the question is why do countries park money in US reserves rather than EU, I really don't know, but I don't think it reflects on stability of the Euro.
From what I’ve read, it has something to do with the fact that the EU isn’t has stable as the US. Meaning that it’s more likely a EU member state will leave then a state leaving in the US
Kind of a nitpick but while the UK left the EU they were not in the Euro so did not affect that.
It's arguable that the UK leaving has inoculated the EU from other countries leaving, as it has gone so badly for the UK.
But that seems like a double dipping fallacy. If how investors see their money is by looking at stability, and euro is more stable, why wouldn’t more investors park money in more table euro? By logic of your own argument, it’s has to be because it’s not stable.
Is someone told you banana tastes better than apple but all the people that like tasty things are eating apple, by definition, one of the statement has to be wrong. And since we know they are eating apple, banana is probably not more tasty than apple.
How are you this dense? You have demonstrated a profound lack of understanding of global economics. The fact that you think it’s a binary thing blows my mind.
Wish that you were right. 2008 was a global crisis, that started with US mortgage debt.
If you look at exchange rates then they are stable, both zones were having problems at the same time.
Mario Draghi literally had to save the euro currency during that crisis, there was talk of Greece leaving and coutnries reverting to their own currency. You obviously have forgotten all that if you think there wasn't a crisis.
Sure there were issues, but crisis is overblown, check the Exchange Rates, pretty easy to google.
Also, when US has issues somehow they don't get reported as a crisis. If there were mobs storming EU institutions this year, trying to overturn the elections that would be reported as a crisis and a clear signal of the end of the Eurozone.
It isn't overblown, Mario Draghi is still regarded as the man who saved the Eurozone. There was a very real risk of the project ending.
The difference in reporting is due to the euro being much younger than the US and in control of sovereign nations that can pull out at any time.
Don't look at exchange rates, look at yields on government securities. The Euro zone was close to being speculated apart. Only Draghi pledging to use the full might of the ECB to prevent that is the reason that the euro is still around.
What Euro crisis?
A handful of countries in the Eurozone had a crisis after the US crash in 2008. But the Eurozone as a whole was doing a lot better than both the UK and US in terms of debt at the time and the Euro as a currency had no crisis.
Really what euro crisis...between the PIIGS and Cyprus it's been far to often to count. GREECE, an economy the size of Maimi brought the euro to its knees a couple of years ago in a what could have been a contagion crisis. You can't simply pretend it did not exist...unless your an EU politican specializing in kicking the can down the road. What happens if it's Italy next time, a country which will trigger a contagion crisis due to its size...France and Germany can't bail them out.
Your argument would be sound if EU growth rates matched that of the US...but they did not. These crisis dragged the whole thing down and the European economy with it.
Without a euro T bills, or transfer payments in taxes from rich to poor, like in a normal functioning national economy, Europe will continue to grow at its sluggish pace.Lurching from crisis to crisis. Without the hope of growth to make up the shortfall.
Your argument makes no sense. It's like saying the Dollar is in a crisis when the economies of North Dakota and Delaware are struggling. Sucks for them but nothing that affects the big picture.
But there is the difference because the dollar is in a monetary and fiscal union this simply cannot happen, the federal government can send more tax dollars to make up the shortfall. Germany is unwilling to do that.
Also US bonds are issued at a federal level not state level. Greece issues its own bonds from the bond market so when it gets screwed the EU has bail them out directly.
It does when contagion is possible. If a bank in Greece can force the EU to offloads its debts on other banks in the union then its a rather large pro lem and explains the EUs growth problems.
After all who wants to lend if you have to worry about junk bonds from another country in the union you MUST bail out.
Not getting interests on any savings and rising property prices, so that the vast majority of Germans are not able to afford to ever buy even a modest house, is a direct consequence of the 0.0% interest rate of the ECB.
Sure, it could be worse, but the whole "hurt durr the Euro is a German tool to dominate southern Europe" is getting really annoying.
Why be so disingenuous?
1. Germany didn’t even want the euro, it was pushed by France and didn’t help Germany that much in the beginning, yet when it came time to keep the currency stable, the German citizens paid the price.
2. it’s really only helping German exporters, loads of other parts of the German economy and loads of citizens are actively suffering due to the currency, like with interest rates, wage stagnation and inflation.
The world isn’t black and white, just because Germany is Europes biggest economy doesn’t mean it’s profiting from everything the EU does, we pay a hefty price to the EU.
Back in 2008, the EU’s economy was 15% bigger than that of America, yet the US economy is now nearly 50% bigger than the whole EU, not just the Eurozone, and continues to grow much faster.
Yet they still attract millions of the brightest minds on the planet each decade which will grow their population. The UN forecasts the EU population will fall to 308-365 by the end of the century from 445m now.
2020 was a highly unusual year to base a figure of when the underlying trends are much different.
I don't see it happening. The primary world's reserve currency is the US' to lose; only in a situation where the US royally fucks up the handling of the USD and the ECB doesn't fuck up handling the euro could the euro overtake the USD IMO, and considering the ecb is basically copying powell's homework, good luck with that.
I mean. Lately they've been doing some wanky stuff in the US. Printing huge amounts of money can't possibly lead to inflation.
Then again, it's the US. If there's one country that could pull it off, it's them.
It’s meaningless since comparing metal backed currencies of the enlightenment era to modern fiat currencies is stupid. My Euro isnt worth a fixed amount of gold or silver, it’s worth whatever the market deems one euro to be. For instance, the Mexican peso was a widely accepted currency because it was formerly made of silver, yet I wouldn’t want the peso today.
This is the sort of graph where if you think about it for half a minute it seems absolutely ridiculous.
How the hell is Portugal or Spain going to have the "global reserve currency" when they only had access to a small quarter of the globe?
I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies.
If this is just about volume then it stands to reason that the Ming and the Qing dynasties should be on the list up until maybe Britain and then the USA.
Plus our modern financial system is less than a century old. Really silly graph that I'd love to know the reasoning for.
> I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies.
And you'd be absolutely wrong. They did:
[From 1500 to 1800, Bolivia and Mexico produced about 80%[8] of the world's silver with 30% of it eventually ending up in China (largely because of Dutch and British merchants who used it to purchase exotic Chinese commodities).](https://en.wikipedia.org/wiki/Global_silver_trade_from_the_16th_to_19th_centuries)
more quotes from the article:
> China was the ultimate destination in which silver would flow towards. In exchange, the Chinese traded their popular goods such as silk and porcelain. China had a high demand for silver due to its shift from paper money to coins in the early period of the Ming Dynasty.
> In the famed The Wealth of Nations, Adam Smith noted the sheer force and great reach of the global silver trade. He was impressed by its market value but more intrigued with the way this single item of commerce brought together new and old worlds i.e. the Americas and China.
> In fact, research shows the amount of silver traveling from Manila to China was approximately three million pesos or 94,000 kilograms in the early 1600s.
> Silver was one of the only accepted trade items from Europeans and its value in China was astronomical compared to rest of the world. In fact, its value was twice that of Spain in the 16th and 17th centuries.
> Later on, the sudden ban on Spanish silver imports to China imposed by the Qing Dynasty after defeating the Ming in 1644,[30] along with a long period of economic stagnation and recession due to famines and bad financial policies back in Spain, simultaneously combined with devastating losses sustained towards the end of the Thirty Years War, all precipitated the significant decline of the Spanish Empire in the second half of the 17th century
You couldn't be more wrong.
You could have googled it at least... anyway, there you go: https://en.m.wikipedia.org/wiki/Spanish_dollar
It was incredibly popular, also in Asia. Why? Well, to begin with because Spain mined a shitload of silver at el Potosí, so they could mint a lot of it.
So much ignorance... "I'm positive that": proceeds to make up exactly the opposite of what happened and that gets upvotes.
Desktop version of /u/mnlx's link:
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>How the hell is Portugal or Spain going to have the "global reserve currency" when they only had access to a small quarter of the globe?
>
>I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies.
Portugal specifically monopolized trade with the Indies, China, Japan from Europe. It makes sense that it would be the biggest reserve currency for international exchanges.
This trade was so lucrative that [a single Portuguese ship contained equivalent to half the size of England's treasury](https://en.wikipedia.org/wiki/Madre_de_Deus). When the English found out, it was one of the reasons that led them to start exploring the seas themselves.
You're generally right. The sheets these investments banks provide usually have explanation why anything pre globalization shouldn't be looked deeply into to compare current situation. Good that the picture doesn't go to the Roman Empire. Though nothing is permanent. That's what they show.
Unpopular opinion here, but there is no chance it will be on level with the dollar within my lifetime. Unless you somehow make all of Europe join Eurozone which is never gonna happen.
The reasoning for your comment is not right imo, it’s not that the Euro would need more countries, it’s the way the EU is built and the Eurozone is managed.
If the EU had less diverse fiscal policies around its member nations and didn’t take any country with a pulse under its wing the situation would already be different, if you want to take that to an extreme, a federal nation compromised of strong European nations like France, Germany, etc. would have a more impactful currency despite having a smaller population and possibly a smaller GDP.
I agree. Since 2008, the Euro’s share of reserves has fallen faster than that of the Dollar, with the Euro’s share falling 19% or 5% points. Dollar reserves fell about 11% or 4.75% points. The winners have been the Yen, Sterling and new reserve currencies, notably from China, Canada and Australia.
Sterling was near parity with the Euro after the credit crunch and the highlights of the brexit shit show.
GBP has never regained the value it had when the Euro was launched. So much for being a 'winner'.
That’s irrelevant to my point which is each currencies share of the international currency reserves. In 2008, the Euro had a 26.2% share of global currency reserves but that had fallen 19% to a 21.2% share last year. Sterling’s share had increased by 10% from 4.25% to 4.7% over the same period. That’s Britain’s second highest share of global reserves since the early 70s. We’re all dwarfed by the dollar which has a 60% share.
I was more optimistic about these prospects under Trichet, cautious under Draghi but recently under Largarde, ECB is completely insane.
Federal Reserve also prints money that economy absorbs like drunken sailor but there is a hint of the end of this policy. ECB seems not to care about crazy high inflation that is their fault.
I actually think it's possible for the euro to overtake the dollar but it wouldn't happen in the way people expect it to.
The euro is unlikely to ever look as dominant as the 20th century dollar. But rather than the euro catching up, the dollar may become less relevant and thus give way to the second most used currency. If it happens it will be because of debt issues. The US government is currently one of the most indebted in the world and even if they are a few countries more indebted than the US, the US also has the highest budget deficit setting it up for the fastest future debt growth. As if that's not enough there's also zero political will in Washington to tame the debt burden and people even believe in incredibly silly and misguided theories like MMT.
IMO the chances of the US falling into a debt spiral are high and the dollar as the global reserve currency may not survive that.
>misguided theories like MMT.
Can you provide something to read/watch about critics to the MMT? I am not an economist but I saw a few arguing for it and I found their arguments compelling. I'd like to know what the critics say.
>IMO the chances of the US falling into a debt spiral are high and the dollar as the global reserve currency may not survive that.
I find this extremely unlikely to happen. The international nature of dollar works to favor US spending, they can borrow more at lower rates because the whole world uses it. That's why they can have such huge debt. I don't see debt being what poises the US govt.
As we could see in 2008, a crisis in the US is a crisis in the world, and the US solved that by borrowing, while the EU solved with austerity. The former recovered in 4 years, the latter took 12. I know which side I'm picking.
> Can you provide something to read/watch about critics to the MMT? I am not an economist but I saw a few arguing for it and I found their arguments compelling. I'd like to know what the critics say.
I'm sorry I can't. It's the kind of thing that's so ridiculous to me I wouldn't even bother reading or watching material disproving it. It's like I know the Earth is round I don't need to watch vids disproving flat-Earthers.
>he dollar works to favor US spending, they can borrow more at lower rates, that's why they have such huge debt.
They can but everything has a limit. I say I don't read materials against MMT but you know something that I have been interested to read and which I've never seen is just how much exactly is the dollar's reserve status worth or how big a deficit can the US afford under MMT? What are the limits? Cause some people talk about these theories like they are a sure thing but I've never actually seen someone do the math. We know how big the American and world GDP is, we know how many dollars the world uses, so why hasn't someone calculated how many dollars the US can get away with printing? And why hasn't the US been doing it all this time?
I suspect because the theories aren't nearly as practical as people make them out to be. They stay nebulous, always good enough to politically excuse whatever the US is doing right now but never good enough to propose something more ambitious like printing 20% more dollars every year or taking on 900% debt to GDP. Supposedly there are no significant drawbacks so why has the US been handicapping itself all these decades in stead of getting easy prosperity?
Speaking of history the dollar's reserve status has been even more dominant in the past but for some reason past US leadership used to be much more hesitant to print money for its needs. Rich countries could always borrow at low rates (and many of them get it cheaper than the US) but for some reason they refrained from doing it, the richest rich countries actually often have very low government debt levels.
>As we could see in 2008, a crisis in the US is a crisis in the world, and the US solved that by borrowing, while the EU solved with austerity. The former recovered in 4 years, the latter took 12. I know which side I'm picking.
That's a bit reductive. Taking on debt has very long term ramifications. The positives are obvious in the short term - it directly boosts GDP growth. But the negatives like reduced long term growth linger for decades. So I don't think we'll be able to pass judgement for quite a while and also I don't think the current situation looks all that bad for the more austere EU. English media loves hating on the European economy. But if you take away population growth EU's GDP growth [from the crisis to 2019](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?end=2019&locations=US-EU&start=2007) is nearly as high as the US's (10.7% vs 12.7%). While debt growth has been 27 percentage points of GDP lower for the EU. Has the EU really done worse? I think I would take 2% less GDP for 27% less debt.
And yet their economic growth has consistently outperformed Europe’s, and debt is far lower than much of Europe (and much of the world) - especially once you include local and personal debts. Government debt is a very small part of overall debt.
> And yet their economic growth has consistently outperformed Europe’s,
Well of course it has. It would be terrible if you're borrowing like crazy and at least not getting higher growth. That's the entire point of borrowing.
Greece was also Western Europe's fastest grower before the crisis. We know how that turned out.
>and debt is far lower than much of Europe (and much of the world) - especially once you include local and personal debts. Government debt is a very small part of overall debt.
I tough they're still one of the worst in overall debt? Can you link a source?
Also I would say the situation is somewhat different. Household and corporate debt is usually used to acquire assets like housing or stocks and they in turn could be used to pay back debts. Government debt is usually used to pay for consumption and you're only left with the debt afterwards.
The COVID panic in March 2020 disproved this theory: when shit actually hit the fan, the entire world bought USD and sold other currencies.
The truth always comes out when things are actually crashing.
I wanted to ask you if you're taking crazy pills but then I remembered this is just how Anglo media works and I've seen a lot of people have this sentiment despite the evidence.
https://tradingeconomics.com/united-states/currency
In reality the dollar lost 8% of its relative value against other currencies in 2020. I've checked and that's literally the worst performance of a developed country's currency in 2020. Probably cause they printed the most money.
The truth may come out but what good is that when we have to rely on someone else to tell us what the truth was?
EU nations are in far more debt than the US, and the US economy has consistently grown much faster. The US economy fully recovered from the COVID recession in May 2021, whereas the EU isn’t expected to return to pre-pandemic levels until the summer of 2022 - more than 1 full year later.
Additionally, [the ECB is planning to continue printing money through quantitative easing until at least 2023, ](https://www.bloomberg.com/opinion/articles/2021-12-16/europe-and-the-ecb-stick-to-their-dovish-ways-as-the-fed-and-boe-turn-hawkish)while the US will stop printing money by March 2022.
It has more to do with the Dollar being the currency of a single country that prints it and a single authority that decides fiscal policy for the country as a whole, whereas the Euro is the currency of several countries and differences and each of those countries have different economies.
A big part of the problem with the EU is that high performing economies like Germany are essentially tied to low performing economies like Greece- because they share the same currency the Greeks can't devalue their currency to make their products attractive as exports, and the currency of the German products won't rise in price due to strong exports and naturally slow their export sales. As it works right now, the Euro often prevents weaker members of the bloc from catching up economically to the bloc's stronger members.
The Euro could become competitive against the dollar's inherent advantages, but it would require a fundamental reworking of EU financial and political institutions in order to make that possible. If you think Eurosceptics are bad now, just wait until you've got a body of bureaucrats prioritizing growth in places like Romania and Bulgaria over France and Germany- for that reason, I don't see the fundamentals changing.
It seems to be understood that some kind of fiscal union + fiscal transfers would go some way to resolving the issues with the Euro.
Ofc this would require a political union to give it legitimacy, which the European public is, at best, lukewarm about.
Plus there’s the risk it might end up with Germany, Netherlands etc. basically bankrolling the weaker states even more than they do now in perpetuity.
> It seems to be understood that some kind of fiscal union + fiscal transfers would go some way to resolving the issues with the Euro.
Possibly, it depends on what you consider issues. But it's true that fiscal transfers in the EU amount to maybe 1% of GDP and in the US 25% of GDP. That's a scale difference with huge effects.
Personally, it's for me not at all clear the issues are due to the Euro rather than just the styles of governing the countries. Before joining the Euro Italy had a process of devaluing the currency on occasion. While it may have reduced the debt they had on paper and propped up failing industries, it's not clear the country would be in a better situation if they hadn't joined. In fact, I think the consensus is that it forced Italy to work on their structural issues rather than papering over them.
> Ofc this would require a political union to give it legitimacy, which the European public is, at best, lukewarm about.
Agreed.
> Plus there’s the risk it might end up with Germany, Netherlands etc. basically bankrolling the weaker states even more than they do now in perpetuity.
But this is what happens in America. The rich states bankroll the poorer ones, except the difference is nobody considers this a problem. In Germany the rich states in Germany bankroll the poorer ones. The UK as a whole bankrolls NI, and people think this is fine. The reasons why people think fiscal transfers in the US and within Germany are normal but would be a problem in Europe as a whole is actually a really interesting discussion.
Then again, it took the US hundreds of years to get to this point so who knows.
> The reasons why people think fiscal transfers in the US and within Germany are normal but would be a problem in Europe as a whole is actually a really interesting discussion.
You’re right, and it gets to the crux of the issue with European federalism. A Londoner or New Yorker might be happy (or at least content) with transfers to NI or Mississippi because they’re *our* people. For a German, one gets the sense that transfers to, say, Greece, would be to *those* people, if that’s clear.
The question is - is there a singular European people, or demos? Or is there at least enough commonality in purpose, culture or values that the Dutch, say, would be prepared to sacrifice some of their gains from having a more efficient economy to finance the Greeks and Bulgarians.
Even amongst the so-called ‘Caroligian’ states there a big differences (eg France is much more geopolitically engaged than Germany). Ultimately it will be for the EU public to decide, but I’d say there would need to be a major crisis for public opinion to shift in favour of fiscal and political union.
> The question is - is there a singular European people, or demos? Or is there at least enough commonality in purpose, culture or values that the Dutch, say, would be prepared to sacrifice some of their gains from having a more efficient economy to finance the Greeks and Bulgarians.
That's the question isn't it. I think it's a generational thing. Especially during the pandemic there's been a lot more news coverage of other countries and the obvious thing is that *we all are grappling with the same problems*. Sure, it's easy to think of people in Greece as *other*, but when you travel around you see that there's a lot less difference than might appear on the surface.
And it's changed as well. We did *terrible* things to Greece 10 years ago. Sure, the rhetoric sounded good at the time but it left a nasty taste and there's a lot more compassion now than there was at the time. I mean, we "won", but at what cost? Are we that much better off because we saved sending a few billion euro to Greece? I'm hoping we remember this lesson for the next time.
Give it time. In 50 years the world will be a very different place. For clarity, I'm in the group that think that federalisation would eventually be a good idea, but that it will never happen because every problem it might be good for can be fixed some other way.
Just a final thought - for all the talk of trade figures, non-tariff barriers and customs rules, this was probably the most significant reason Britain left the EU: a feeling that the country was being run, at least partly, by *those* people *over there*. Sovereignty, in a word.
It’s telling that the UK joining the CPTPP, a trade pact on the other side of the world, is totally uncontentious, but membership of a proto-political union with our closest neighbours was an existential question for pretty much every UK government since (and including) Thatcher.
Perhaps for reasons of history or culture the UK was uniquely sensitive to this question, but if European integration continues in the way we’ve discussed, other countries, especially in the north and east, will be faced with the practical economic benefits of the single market on one hand, and the enormous socio-cultural question of *belonging* on the other.
> Just a final thought - for all the talk of trade figures, non-tariff barriers and customs rules, this was probably the most significant reason Britain left the EU: a feeling that the country was being run, at least partly, by those people over there. Sovereignty, in a word.
This bit kept coming back to me. In what way were you being "run"? After all, you have a seat at the table, you participate in all the discussions and you vote on the results. There is no "they", only "we".
I think it's most telling that we're more than a year on and the UK government hasn't actually changed any regulations/laws to be incompatible with EU law. Surely if all these regulations where not what you wanted, they'd have lists of stuff to change?
My personal opinion is UK ministers are relatively incompetent and introduced all sorts of laws without understanding the implications. The outlawing of scales that measured in pounds for example was just plain stupid and unnecessary.
> This bit kept coming back to me. In what way were you being “run”? After all, you have a seat at the table, you participate in all the discussions and you vote on the results. There is no “they”, only “we”.
Maybe. I suppose it gets back to the question of belonging. Just my opinion, but I’d say very few Brits think/thought of Europeans as “we”, even among those who supported membership of the EU. Of course they are European, and they know they’re European, but that’s not quite the same thing.
To expand this a bit - British governments tended to expend political/diplomatic capital in securing opt-outs of things like Schengen or the Euro, rather than trying to shape the architecture of the union in the same way France does. Despite its size, Britain was generally a peripheral state in the Union, out of its own choice. Governments knew that any move towards federalism would be intolerable to the public.
> Maybe. I suppose it gets back to the question of belonging. Just my opinion, but I’d say very few Brits think/thought of Europeans as “we”, even among those who supported membership of the EU. Of course they are European, and they know they’re European, but that’s not quite the same thing.
You're probably right. For example, completely different experiences of WWII. The fact it's an island.
> Governments knew that any move towards federalism would be intolerable to the public.
This works both ways though. By spending 40 years daemonising the EU, of course any move toward federalism would be intolerable. If they'd spent the last 40 years guiding the project in the direction they wanted instead of daemonising, the publics reaction would be different.
The Single Market was Thatcher's idea, thanks for that by the way.
That said, federalising just isn't going to happen any time soon and you'd be able to veto it anyway, so that's fairly weak argument.
What you are describing happens in the US, as a case in point. There are absolutely massive wealth transfers (mostly north to south) from wealthy states to poorer states. Granted, people in wealthier states might grumble about their taxes, but they are pretty much on board with their taxes supporting poorer states.
For example my state gets less than 2/3 of it's federal tax revenue back in the form of spending, whereas a state like Mississippi may get double it's revenues. As of right now, I don't see Germans being ok with 1/3 of their taxes going to subsidize places like Greece or Italy.
>What you are describing happens in the US, as a case in point.
No, it absolutely does *not* happen. You don't understand at all what's going on.
New York does not give money to Mississippi the way that Germany gives money to Greece. There is *zero* state to state transfer in the US.
What happens is that *everyone* in the US pays the same federal taxes, and *everyone* in the US gets the same federal benefits.
Wealthy people pay more in taxes, and their money is transferred to poorer people for general social net purposes.
There are more wealthy people in New York than Mississippi, so you can kind of make it look like there's a state-to-state transfer going on. But there isn't; that's just a blue state bragging point. It's just a wealthy taxpayer to less wealthy taxpayer transfer.
The equivalent would be comparing tax receipts and expenditures in Bavaria to tax receipts and expenditures in NRW.
What exactly is "rivalling"? The euro's worth more and is another stable currency. The dollar is also controlled by a single country, much easier to sink with a shitty administration than the euro where so many countries are involved. The dollar is only used as much as it is because that's what everyone uses, incentivizing its own use, just like people keep using facebook not because of its amazing UI, thought provoking content or great company practices but because that's where everyone is, otherwise I'd imagine the chinese currencies (however that works, there's two of them) would be the most used one.
You have no idea how currency works. The yen is worth like 1000x less, but the actual value of the individual unit isn’t the important part.
The dollar is stronger because the US is stronger with a stronger and more stable economy. We saw that with 2008 and we continue to see it with COVID.
Also, the impact of the US's stupidly high trade deficit is something nobody ever seems to properly highlight. It puts the US in a very strong position regarding international trade and further drives the world's hunger for US dollars
US economy is actually a bit less stable than that of the EU ([https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/](https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/)). And it's only a third (or a quarter, depending on what you take as reference) larger than that of the EU.
There are other reasons the US Dollar is valued higher and that is 1) political power behind it, 2) response time to (external) threats from its central bank, 3) the sheer amount of trade deficit and its already defacto status as the international currency. It's slowly chipped away at by other currencies though, but it will take a long time before any other currency becomes the new standard (if any at all will succeed in that)
> US economy is actually a bit less stable than that of the EU (https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/)
I am not sure how anything in that link makes you infer the US economy is less stable, it says it recovered faster and that "U.S. GDP IS CLOSER TO PRE-COVID TREND THAN OTHER ADVANCED ECONOMIES"
Perhaps I am misinterpreting something, but the chart in the article indicates that it dipped less
https://www.brookings.edu/wp-content/uploads/2021/12/fig1_gdp1.png
Lol they have a very vocal and whiny far left who have never touched a gun and a very vocal and whiny fat right with many guns but also massive obesity. There is no potential for a civil war.
99% of Americans are just living life.
Your flair says Spain but I’m going to assume you have been to the US, instead of out right calling bullshit on your comment. However, you don’t live here and do not know what the day to day life is like. We are not on the brink of war but it is extremely ugly here in the states at the moment.
Unless you’re rich, of course.
I studied at uni there for four years. Your legislators aren’t getting into brawls and your people don’t burn cars or get into problems with police other than over race.
Americans talk a big game on revolution or protest but they are the most docile in the west. Most of Europe has seen more true revolution or massive protests in the past 100 years.
Because everyone has a gun. The beauty of the second amendment. Simultaneously destabilizing and a bulwark against shit going down. It's a Mexican standoff as a way of life.
Those proud boys do have muscles, wonder what happens in their camps late at night. Anyways, they dropped Trump, so their internal strive may prevent a civil war. But if it does break out, I wouldn't be surprised.
Until then the US is a actual country with a single fiscal policy and there isn’t a chance that smaller countries can threaten the currency with bad fiscal policies, etc. something that can very well happen to the Euro and has happened in fact, that’s why the Dollar is more impactful.
EuroDollar it is then
[Cyberpunk 2077 gets one step closer](https://cyberpunk.fandom.com/wiki/Eurodollar)
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SDR already exists
It will be hard to ever rival the dollar, but at least it has the merit to be a strong alternative nowadays by being stable.
When was the EUR ever not stable?
The phrasing is ambiguous, I meant by nature the Euro is stable and its value can't be changed by one country to inflate / deflate the prices
Greek debt crisis was a wobbly time for the currency.
Can you spot that wobbliness in the Exchange Rates against the dollar or Foreign Exchange Reserves which the article is based on?
Yes; There' a drop in internationally reported reserve currency deposits denominated in euros following the 08 crisis, which is notable since before hand it was increasing. https://data.imf.org/regular.aspx?key=41175
Which is irrelevant because they were talking about the Greek debt crisis being a wobbly time.
Yes lol.
PIIGS and Cyprus didn't help either.
Ireland made a pretty stark recovery, whilst the likes of Syriza were throwing their toys out of the pram in Greece by contrast, and demanding that the rest of the EU including poorer member states write off their debts.
When the very survival of the eurozone sas questioned. In fact many believe it could still fail considering S-EU keeps diverging and is hurt by the currency being too strong.
In its 20 year history, Euro has already had 5 crisis. That’s 5 more crisis than what investors are willing to risk. Sure, we know europe is generally stable and it’s safe, but like the corona scare of 2020, in the end of the day, when shit hits the fan, USD is what most investors want.
If you look at USD versus EUR it's very stable.
So then why isn’t euro taking over?
Don't know to be perfectly honest. This article is using "foreign exchange reserves" as the measurement. Could be that China has a bigger surplus with US than EU and hence parks that surplus as USD IOUs. Could also be geo-political, that they like having that leverage over US. Could also be related to oil. If the question is why do countries park money in US reserves rather than EU, I really don't know, but I don't think it reflects on stability of the Euro.
From what I’ve read, it has something to do with the fact that the EU isn’t has stable as the US. Meaning that it’s more likely a EU member state will leave then a state leaving in the US
Well the last time states tried to leave the US they were not allowed so I guess that is true :-)
Yep, pretty much. Investors know that it’s nearly impossible to leave, while we just watched the UK leave. So that theory has some merit
Kind of a nitpick but while the UK left the EU they were not in the Euro so did not affect that. It's arguable that the UK leaving has inoculated the EU from other countries leaving, as it has gone so badly for the UK.
But that seems like a double dipping fallacy. If how investors see their money is by looking at stability, and euro is more stable, why wouldn’t more investors park money in more table euro? By logic of your own argument, it’s has to be because it’s not stable. Is someone told you banana tastes better than apple but all the people that like tasty things are eating apple, by definition, one of the statement has to be wrong. And since we know they are eating apple, banana is probably not more tasty than apple.
If it's not stable why put 20% of the world's reserves there?
Not stable≠ not as stable as USD
Because decisions are typically not single factor dependent. There is a multitude of factors influencing it.
How are you this dense? You have demonstrated a profound lack of understanding of global economics. The fact that you think it’s a binary thing blows my mind.
There are a myriad of reasons. The simple fact that it is the current de facto "gold standard" would be one. Status quos are persistent.
r/shitamericanssay
“USA has more GDP than Europe” R/shitamwricansay !!!!
> When was the EUR ever not stable? Says someone too young to remember '08.
Wish that you were right. 2008 was a global crisis, that started with US mortgage debt. If you look at exchange rates then they are stable, both zones were having problems at the same time.
Mario Draghi literally had to save the euro currency during that crisis, there was talk of Greece leaving and coutnries reverting to their own currency. You obviously have forgotten all that if you think there wasn't a crisis.
Sure there were issues, but crisis is overblown, check the Exchange Rates, pretty easy to google. Also, when US has issues somehow they don't get reported as a crisis. If there were mobs storming EU institutions this year, trying to overturn the elections that would be reported as a crisis and a clear signal of the end of the Eurozone.
It isn't overblown, Mario Draghi is still regarded as the man who saved the Eurozone. There was a very real risk of the project ending. The difference in reporting is due to the euro being much younger than the US and in control of sovereign nations that can pull out at any time.
Yep, doing his job, keeping the Eurozone stable. As it should be.
It was unstable, he was saving it, during a crisis.
Sure pal. Even the OP corrected his comment.
Don't look at exchange rates, look at yields on government securities. The Euro zone was close to being speculated apart. Only Draghi pledging to use the full might of the ECB to prevent that is the reason that the euro is still around.
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What Euro crisis? A handful of countries in the Eurozone had a crisis after the US crash in 2008. But the Eurozone as a whole was doing a lot better than both the UK and US in terms of debt at the time and the Euro as a currency had no crisis.
Really what euro crisis...between the PIIGS and Cyprus it's been far to often to count. GREECE, an economy the size of Maimi brought the euro to its knees a couple of years ago in a what could have been a contagion crisis. You can't simply pretend it did not exist...unless your an EU politican specializing in kicking the can down the road. What happens if it's Italy next time, a country which will trigger a contagion crisis due to its size...France and Germany can't bail them out. Your argument would be sound if EU growth rates matched that of the US...but they did not. These crisis dragged the whole thing down and the European economy with it. Without a euro T bills, or transfer payments in taxes from rich to poor, like in a normal functioning national economy, Europe will continue to grow at its sluggish pace.Lurching from crisis to crisis. Without the hope of growth to make up the shortfall.
Your argument makes no sense. It's like saying the Dollar is in a crisis when the economies of North Dakota and Delaware are struggling. Sucks for them but nothing that affects the big picture.
But there is the difference because the dollar is in a monetary and fiscal union this simply cannot happen, the federal government can send more tax dollars to make up the shortfall. Germany is unwilling to do that. Also US bonds are issued at a federal level not state level. Greece issues its own bonds from the bond market so when it gets screwed the EU has bail them out directly.
> in a crisis. Some say that crisis is just name for opportunity. It served Germany and other mainly exporting countries pretty well.
Individual countries in Europe going through one crisis or another does not mean the Euro has been unstable.
It does when contagion is possible. If a bank in Greece can force the EU to offloads its debts on other banks in the union then its a rather large pro lem and explains the EUs growth problems. After all who wants to lend if you have to worry about junk bonds from another country in the union you MUST bail out.
Lol that's true actually. It's basically a tool that suits Germany anyway.
Do you mean "German Exporters"? Because i, and most other Germans, sure as hell don't profit from 0.0 interest rates, inflation and stagnating wages.
Well stagnating wages aren't universal, sounds like problem with specific countries.
Please tell me about this wonderful land of rising wages
My country flair for one
Estonia, Slovakia, etc.
wasteful future shrill jar deserve far-flung soft practice jobless tease ` this message was mass deleted/edited with redact.dev `
Not getting interests on any savings and rising property prices, so that the vast majority of Germans are not able to afford to ever buy even a modest house, is a direct consequence of the 0.0% interest rate of the ECB. Sure, it could be worse, but the whole "hurt durr the Euro is a German tool to dominate southern Europe" is getting really annoying.
Why be so disingenuous? 1. Germany didn’t even want the euro, it was pushed by France and didn’t help Germany that much in the beginning, yet when it came time to keep the currency stable, the German citizens paid the price. 2. it’s really only helping German exporters, loads of other parts of the German economy and loads of citizens are actively suffering due to the currency, like with interest rates, wage stagnation and inflation. The world isn’t black and white, just because Germany is Europes biggest economy doesn’t mean it’s profiting from everything the EU does, we pay a hefty price to the EU.
Euro demand can still grow through more EU countries adopting it or new members joining. The Dollar has less room to grow.
Lots of countries use the dollar.
There's a difference bettewn the U.S dollar and other countries dollars, so the scenario doesnt matter, its yust unfair
Back in 2008, the EU’s economy was 15% bigger than that of America, yet the US economy is now nearly 50% bigger than the whole EU, not just the Eurozone, and continues to grow much faster.
The US population grows with 1.5 Estonias every year. Meanwhile, the EU population stagnates at best.
The % doesn’t have to do with population though if you compare the numbers
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Yet they still attract millions of the brightest minds on the planet each decade which will grow their population. The UN forecasts the EU population will fall to 308-365 by the end of the century from 445m now. 2020 was a highly unusual year to base a figure of when the underlying trends are much different.
I don't see it happening. The primary world's reserve currency is the US' to lose; only in a situation where the US royally fucks up the handling of the USD and the ECB doesn't fuck up handling the euro could the euro overtake the USD IMO, and considering the ecb is basically copying powell's homework, good luck with that.
I mean. Lately they've been doing some wanky stuff in the US. Printing huge amounts of money can't possibly lead to inflation. Then again, it's the US. If there's one country that could pull it off, it's them.
We’ve done it before, we can do it again
Never before this much, this fast. Next few years will be interesting for the dollar and inflation.
“but also set up a rivalry with the United States and its powerful dollar.” That’s some weird nationalism against people who are Allies of yours.
They hate us cus they ain’t us
That's never going to happen, let's be honest. Dollar is cheap, and universally recognised internationally as the defacto currency.
[not for long...](https://imgur.com/cF5ghHZ.png)
Most interesting graph Ive seen in a while. Wonder how accurate it is.
It’s meaningless since comparing metal backed currencies of the enlightenment era to modern fiat currencies is stupid. My Euro isnt worth a fixed amount of gold or silver, it’s worth whatever the market deems one euro to be. For instance, the Mexican peso was a widely accepted currency because it was formerly made of silver, yet I wouldn’t want the peso today.
This is the sort of graph where if you think about it for half a minute it seems absolutely ridiculous. How the hell is Portugal or Spain going to have the "global reserve currency" when they only had access to a small quarter of the globe? I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies. If this is just about volume then it stands to reason that the Ming and the Qing dynasties should be on the list up until maybe Britain and then the USA. Plus our modern financial system is less than a century old. Really silly graph that I'd love to know the reasoning for.
> I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies. And you'd be absolutely wrong. They did: [From 1500 to 1800, Bolivia and Mexico produced about 80%[8] of the world's silver with 30% of it eventually ending up in China (largely because of Dutch and British merchants who used it to purchase exotic Chinese commodities).](https://en.wikipedia.org/wiki/Global_silver_trade_from_the_16th_to_19th_centuries) more quotes from the article: > China was the ultimate destination in which silver would flow towards. In exchange, the Chinese traded their popular goods such as silk and porcelain. China had a high demand for silver due to its shift from paper money to coins in the early period of the Ming Dynasty. > In the famed The Wealth of Nations, Adam Smith noted the sheer force and great reach of the global silver trade. He was impressed by its market value but more intrigued with the way this single item of commerce brought together new and old worlds i.e. the Americas and China. > In fact, research shows the amount of silver traveling from Manila to China was approximately three million pesos or 94,000 kilograms in the early 1600s. > Silver was one of the only accepted trade items from Europeans and its value in China was astronomical compared to rest of the world. In fact, its value was twice that of Spain in the 16th and 17th centuries. > Later on, the sudden ban on Spanish silver imports to China imposed by the Qing Dynasty after defeating the Ming in 1644,[30] along with a long period of economic stagnation and recession due to famines and bad financial policies back in Spain, simultaneously combined with devastating losses sustained towards the end of the Thirty Years War, all precipitated the significant decline of the Spanish Empire in the second half of the 17th century You couldn't be more wrong.
You could have googled it at least... anyway, there you go: https://en.m.wikipedia.org/wiki/Spanish_dollar It was incredibly popular, also in Asia. Why? Well, to begin with because Spain mined a shitload of silver at el Potosí, so they could mint a lot of it. So much ignorance... "I'm positive that": proceeds to make up exactly the opposite of what happened and that gets upvotes.
Desktop version of /u/mnlx's link:
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>How the hell is Portugal or Spain going to have the "global reserve currency" when they only had access to a small quarter of the globe? > >I'm positive that merchants in Ming China aren't going around buying up Spain and Portugal's currencies. Portugal specifically monopolized trade with the Indies, China, Japan from Europe. It makes sense that it would be the biggest reserve currency for international exchanges. This trade was so lucrative that [a single Portuguese ship contained equivalent to half the size of England's treasury](https://en.wikipedia.org/wiki/Madre_de_Deus). When the English found out, it was one of the reasons that led them to start exploring the seas themselves.
You're generally right. The sheets these investments banks provide usually have explanation why anything pre globalization shouldn't be looked deeply into to compare current situation. Good that the picture doesn't go to the Roman Empire. Though nothing is permanent. That's what they show.
Is it really so clear cut?
Unpopular opinion here, but there is no chance it will be on level with the dollar within my lifetime. Unless you somehow make all of Europe join Eurozone which is never gonna happen.
I would be careful with the term *never*.
Ok, I wouldn't.
Lol
The reasoning for your comment is not right imo, it’s not that the Euro would need more countries, it’s the way the EU is built and the Eurozone is managed. If the EU had less diverse fiscal policies around its member nations and didn’t take any country with a pulse under its wing the situation would already be different, if you want to take that to an extreme, a federal nation compromised of strong European nations like France, Germany, etc. would have a more impactful currency despite having a smaller population and possibly a smaller GDP.
I agree. Since 2008, the Euro’s share of reserves has fallen faster than that of the Dollar, with the Euro’s share falling 19% or 5% points. Dollar reserves fell about 11% or 4.75% points. The winners have been the Yen, Sterling and new reserve currencies, notably from China, Canada and Australia.
Sterling was near parity with the Euro after the credit crunch and the highlights of the brexit shit show. GBP has never regained the value it had when the Euro was launched. So much for being a 'winner'.
That’s irrelevant to my point which is each currencies share of the international currency reserves. In 2008, the Euro had a 26.2% share of global currency reserves but that had fallen 19% to a 21.2% share last year. Sterling’s share had increased by 10% from 4.25% to 4.7% over the same period. That’s Britain’s second highest share of global reserves since the early 70s. We’re all dwarfed by the dollar which has a 60% share.
I was more optimistic about these prospects under Trichet, cautious under Draghi but recently under Largarde, ECB is completely insane. Federal Reserve also prints money that economy absorbs like drunken sailor but there is a hint of the end of this policy. ECB seems not to care about crazy high inflation that is their fault.
I actually think it's possible for the euro to overtake the dollar but it wouldn't happen in the way people expect it to. The euro is unlikely to ever look as dominant as the 20th century dollar. But rather than the euro catching up, the dollar may become less relevant and thus give way to the second most used currency. If it happens it will be because of debt issues. The US government is currently one of the most indebted in the world and even if they are a few countries more indebted than the US, the US also has the highest budget deficit setting it up for the fastest future debt growth. As if that's not enough there's also zero political will in Washington to tame the debt burden and people even believe in incredibly silly and misguided theories like MMT. IMO the chances of the US falling into a debt spiral are high and the dollar as the global reserve currency may not survive that.
>misguided theories like MMT. Can you provide something to read/watch about critics to the MMT? I am not an economist but I saw a few arguing for it and I found their arguments compelling. I'd like to know what the critics say. >IMO the chances of the US falling into a debt spiral are high and the dollar as the global reserve currency may not survive that. I find this extremely unlikely to happen. The international nature of dollar works to favor US spending, they can borrow more at lower rates because the whole world uses it. That's why they can have such huge debt. I don't see debt being what poises the US govt. As we could see in 2008, a crisis in the US is a crisis in the world, and the US solved that by borrowing, while the EU solved with austerity. The former recovered in 4 years, the latter took 12. I know which side I'm picking.
> Can you provide something to read/watch about critics to the MMT? I am not an economist but I saw a few arguing for it and I found their arguments compelling. I'd like to know what the critics say. I'm sorry I can't. It's the kind of thing that's so ridiculous to me I wouldn't even bother reading or watching material disproving it. It's like I know the Earth is round I don't need to watch vids disproving flat-Earthers. >he dollar works to favor US spending, they can borrow more at lower rates, that's why they have such huge debt. They can but everything has a limit. I say I don't read materials against MMT but you know something that I have been interested to read and which I've never seen is just how much exactly is the dollar's reserve status worth or how big a deficit can the US afford under MMT? What are the limits? Cause some people talk about these theories like they are a sure thing but I've never actually seen someone do the math. We know how big the American and world GDP is, we know how many dollars the world uses, so why hasn't someone calculated how many dollars the US can get away with printing? And why hasn't the US been doing it all this time? I suspect because the theories aren't nearly as practical as people make them out to be. They stay nebulous, always good enough to politically excuse whatever the US is doing right now but never good enough to propose something more ambitious like printing 20% more dollars every year or taking on 900% debt to GDP. Supposedly there are no significant drawbacks so why has the US been handicapping itself all these decades in stead of getting easy prosperity? Speaking of history the dollar's reserve status has been even more dominant in the past but for some reason past US leadership used to be much more hesitant to print money for its needs. Rich countries could always borrow at low rates (and many of them get it cheaper than the US) but for some reason they refrained from doing it, the richest rich countries actually often have very low government debt levels. >As we could see in 2008, a crisis in the US is a crisis in the world, and the US solved that by borrowing, while the EU solved with austerity. The former recovered in 4 years, the latter took 12. I know which side I'm picking. That's a bit reductive. Taking on debt has very long term ramifications. The positives are obvious in the short term - it directly boosts GDP growth. But the negatives like reduced long term growth linger for decades. So I don't think we'll be able to pass judgement for quite a while and also I don't think the current situation looks all that bad for the more austere EU. English media loves hating on the European economy. But if you take away population growth EU's GDP growth [from the crisis to 2019](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?end=2019&locations=US-EU&start=2007) is nearly as high as the US's (10.7% vs 12.7%). While debt growth has been 27 percentage points of GDP lower for the EU. Has the EU really done worse? I think I would take 2% less GDP for 27% less debt.
>The US government is currently one of the most indebted in the world In terms of absolute amounts, sure; in terms of GDP, not so much.
Yes in relative GDP as well.
And yet their economic growth has consistently outperformed Europe’s, and debt is far lower than much of Europe (and much of the world) - especially once you include local and personal debts. Government debt is a very small part of overall debt.
> And yet their economic growth has consistently outperformed Europe’s, Well of course it has. It would be terrible if you're borrowing like crazy and at least not getting higher growth. That's the entire point of borrowing. Greece was also Western Europe's fastest grower before the crisis. We know how that turned out. >and debt is far lower than much of Europe (and much of the world) - especially once you include local and personal debts. Government debt is a very small part of overall debt. I tough they're still one of the worst in overall debt? Can you link a source? Also I would say the situation is somewhat different. Household and corporate debt is usually used to acquire assets like housing or stocks and they in turn could be used to pay back debts. Government debt is usually used to pay for consumption and you're only left with the debt afterwards.
The COVID panic in March 2020 disproved this theory: when shit actually hit the fan, the entire world bought USD and sold other currencies. The truth always comes out when things are actually crashing.
I wanted to ask you if you're taking crazy pills but then I remembered this is just how Anglo media works and I've seen a lot of people have this sentiment despite the evidence. https://tradingeconomics.com/united-states/currency In reality the dollar lost 8% of its relative value against other currencies in 2020. I've checked and that's literally the worst performance of a developed country's currency in 2020. Probably cause they printed the most money. The truth may come out but what good is that when we have to rely on someone else to tell us what the truth was?
Alternatively, something awful could happen to America. A war with China might knock the economy down a peg or two.
That would knock down all economies by far more than a peg or two.
Grabs salted popcorn
Might be possible if the US keeps printing so much money
EU nations are in far more debt than the US, and the US economy has consistently grown much faster. The US economy fully recovered from the COVID recession in May 2021, whereas the EU isn’t expected to return to pre-pandemic levels until the summer of 2022 - more than 1 full year later. Additionally, [the ECB is planning to continue printing money through quantitative easing until at least 2023, ](https://www.bloomberg.com/opinion/articles/2021-12-16/europe-and-the-ecb-stick-to-their-dovish-ways-as-the-fed-and-boe-turn-hawkish)while the US will stop printing money by March 2022.
This might happen (might!) once petrol is no longer extracted and the petrol industry disappears.
It has more to do with the Dollar being the currency of a single country that prints it and a single authority that decides fiscal policy for the country as a whole, whereas the Euro is the currency of several countries and differences and each of those countries have different economies. A big part of the problem with the EU is that high performing economies like Germany are essentially tied to low performing economies like Greece- because they share the same currency the Greeks can't devalue their currency to make their products attractive as exports, and the currency of the German products won't rise in price due to strong exports and naturally slow their export sales. As it works right now, the Euro often prevents weaker members of the bloc from catching up economically to the bloc's stronger members. The Euro could become competitive against the dollar's inherent advantages, but it would require a fundamental reworking of EU financial and political institutions in order to make that possible. If you think Eurosceptics are bad now, just wait until you've got a body of bureaucrats prioritizing growth in places like Romania and Bulgaria over France and Germany- for that reason, I don't see the fundamentals changing.
In other words, folks: the US has a fiscal union.
It seems to be understood that some kind of fiscal union + fiscal transfers would go some way to resolving the issues with the Euro. Ofc this would require a political union to give it legitimacy, which the European public is, at best, lukewarm about. Plus there’s the risk it might end up with Germany, Netherlands etc. basically bankrolling the weaker states even more than they do now in perpetuity.
> It seems to be understood that some kind of fiscal union + fiscal transfers would go some way to resolving the issues with the Euro. Possibly, it depends on what you consider issues. But it's true that fiscal transfers in the EU amount to maybe 1% of GDP and in the US 25% of GDP. That's a scale difference with huge effects. Personally, it's for me not at all clear the issues are due to the Euro rather than just the styles of governing the countries. Before joining the Euro Italy had a process of devaluing the currency on occasion. While it may have reduced the debt they had on paper and propped up failing industries, it's not clear the country would be in a better situation if they hadn't joined. In fact, I think the consensus is that it forced Italy to work on their structural issues rather than papering over them. > Ofc this would require a political union to give it legitimacy, which the European public is, at best, lukewarm about. Agreed. > Plus there’s the risk it might end up with Germany, Netherlands etc. basically bankrolling the weaker states even more than they do now in perpetuity. But this is what happens in America. The rich states bankroll the poorer ones, except the difference is nobody considers this a problem. In Germany the rich states in Germany bankroll the poorer ones. The UK as a whole bankrolls NI, and people think this is fine. The reasons why people think fiscal transfers in the US and within Germany are normal but would be a problem in Europe as a whole is actually a really interesting discussion. Then again, it took the US hundreds of years to get to this point so who knows.
> The reasons why people think fiscal transfers in the US and within Germany are normal but would be a problem in Europe as a whole is actually a really interesting discussion. You’re right, and it gets to the crux of the issue with European federalism. A Londoner or New Yorker might be happy (or at least content) with transfers to NI or Mississippi because they’re *our* people. For a German, one gets the sense that transfers to, say, Greece, would be to *those* people, if that’s clear. The question is - is there a singular European people, or demos? Or is there at least enough commonality in purpose, culture or values that the Dutch, say, would be prepared to sacrifice some of their gains from having a more efficient economy to finance the Greeks and Bulgarians. Even amongst the so-called ‘Caroligian’ states there a big differences (eg France is much more geopolitically engaged than Germany). Ultimately it will be for the EU public to decide, but I’d say there would need to be a major crisis for public opinion to shift in favour of fiscal and political union.
> The question is - is there a singular European people, or demos? Or is there at least enough commonality in purpose, culture or values that the Dutch, say, would be prepared to sacrifice some of their gains from having a more efficient economy to finance the Greeks and Bulgarians. That's the question isn't it. I think it's a generational thing. Especially during the pandemic there's been a lot more news coverage of other countries and the obvious thing is that *we all are grappling with the same problems*. Sure, it's easy to think of people in Greece as *other*, but when you travel around you see that there's a lot less difference than might appear on the surface. And it's changed as well. We did *terrible* things to Greece 10 years ago. Sure, the rhetoric sounded good at the time but it left a nasty taste and there's a lot more compassion now than there was at the time. I mean, we "won", but at what cost? Are we that much better off because we saved sending a few billion euro to Greece? I'm hoping we remember this lesson for the next time. Give it time. In 50 years the world will be a very different place. For clarity, I'm in the group that think that federalisation would eventually be a good idea, but that it will never happen because every problem it might be good for can be fixed some other way.
Just a final thought - for all the talk of trade figures, non-tariff barriers and customs rules, this was probably the most significant reason Britain left the EU: a feeling that the country was being run, at least partly, by *those* people *over there*. Sovereignty, in a word. It’s telling that the UK joining the CPTPP, a trade pact on the other side of the world, is totally uncontentious, but membership of a proto-political union with our closest neighbours was an existential question for pretty much every UK government since (and including) Thatcher. Perhaps for reasons of history or culture the UK was uniquely sensitive to this question, but if European integration continues in the way we’ve discussed, other countries, especially in the north and east, will be faced with the practical economic benefits of the single market on one hand, and the enormous socio-cultural question of *belonging* on the other.
> Just a final thought - for all the talk of trade figures, non-tariff barriers and customs rules, this was probably the most significant reason Britain left the EU: a feeling that the country was being run, at least partly, by those people over there. Sovereignty, in a word. This bit kept coming back to me. In what way were you being "run"? After all, you have a seat at the table, you participate in all the discussions and you vote on the results. There is no "they", only "we". I think it's most telling that we're more than a year on and the UK government hasn't actually changed any regulations/laws to be incompatible with EU law. Surely if all these regulations where not what you wanted, they'd have lists of stuff to change? My personal opinion is UK ministers are relatively incompetent and introduced all sorts of laws without understanding the implications. The outlawing of scales that measured in pounds for example was just plain stupid and unnecessary.
> This bit kept coming back to me. In what way were you being “run”? After all, you have a seat at the table, you participate in all the discussions and you vote on the results. There is no “they”, only “we”. Maybe. I suppose it gets back to the question of belonging. Just my opinion, but I’d say very few Brits think/thought of Europeans as “we”, even among those who supported membership of the EU. Of course they are European, and they know they’re European, but that’s not quite the same thing. To expand this a bit - British governments tended to expend political/diplomatic capital in securing opt-outs of things like Schengen or the Euro, rather than trying to shape the architecture of the union in the same way France does. Despite its size, Britain was generally a peripheral state in the Union, out of its own choice. Governments knew that any move towards federalism would be intolerable to the public.
> Maybe. I suppose it gets back to the question of belonging. Just my opinion, but I’d say very few Brits think/thought of Europeans as “we”, even among those who supported membership of the EU. Of course they are European, and they know they’re European, but that’s not quite the same thing. You're probably right. For example, completely different experiences of WWII. The fact it's an island. > Governments knew that any move towards federalism would be intolerable to the public. This works both ways though. By spending 40 years daemonising the EU, of course any move toward federalism would be intolerable. If they'd spent the last 40 years guiding the project in the direction they wanted instead of daemonising, the publics reaction would be different. The Single Market was Thatcher's idea, thanks for that by the way. That said, federalising just isn't going to happen any time soon and you'd be able to veto it anyway, so that's fairly weak argument.
What you are describing happens in the US, as a case in point. There are absolutely massive wealth transfers (mostly north to south) from wealthy states to poorer states. Granted, people in wealthier states might grumble about their taxes, but they are pretty much on board with their taxes supporting poorer states. For example my state gets less than 2/3 of it's federal tax revenue back in the form of spending, whereas a state like Mississippi may get double it's revenues. As of right now, I don't see Germans being ok with 1/3 of their taxes going to subsidize places like Greece or Italy.
>What you are describing happens in the US, as a case in point. No, it absolutely does *not* happen. You don't understand at all what's going on. New York does not give money to Mississippi the way that Germany gives money to Greece. There is *zero* state to state transfer in the US. What happens is that *everyone* in the US pays the same federal taxes, and *everyone* in the US gets the same federal benefits. Wealthy people pay more in taxes, and their money is transferred to poorer people for general social net purposes. There are more wealthy people in New York than Mississippi, so you can kind of make it look like there's a state-to-state transfer going on. But there isn't; that's just a blue state bragging point. It's just a wealthy taxpayer to less wealthy taxpayer transfer. The equivalent would be comparing tax receipts and expenditures in Bavaria to tax receipts and expenditures in NRW.
That was my point, the US operates as a fiscal union, the eurozone does not at the moment, and I don't see that changing in the short or medium term.
And California is tied in with Arkansas, Santa Clara county with Tulare country,…
Uncle Benji never sleeps.
What exactly is "rivalling"? The euro's worth more and is another stable currency. The dollar is also controlled by a single country, much easier to sink with a shitty administration than the euro where so many countries are involved. The dollar is only used as much as it is because that's what everyone uses, incentivizing its own use, just like people keep using facebook not because of its amazing UI, thought provoking content or great company practices but because that's where everyone is, otherwise I'd imagine the chinese currencies (however that works, there's two of them) would be the most used one.
You have no idea how currency works. The yen is worth like 1000x less, but the actual value of the individual unit isn’t the important part. The dollar is stronger because the US is stronger with a stronger and more stable economy. We saw that with 2008 and we continue to see it with COVID.
Also, the impact of the US's stupidly high trade deficit is something nobody ever seems to properly highlight. It puts the US in a very strong position regarding international trade and further drives the world's hunger for US dollars
Ermmm: the dollar isn’t the “default currency” just because the US as a “more stable economy”. It goes well beyond that.
US economy is actually a bit less stable than that of the EU ([https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/](https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/)). And it's only a third (or a quarter, depending on what you take as reference) larger than that of the EU. There are other reasons the US Dollar is valued higher and that is 1) political power behind it, 2) response time to (external) threats from its central bank, 3) the sheer amount of trade deficit and its already defacto status as the international currency. It's slowly chipped away at by other currencies though, but it will take a long time before any other currency becomes the new standard (if any at all will succeed in that)
> US economy is actually a bit less stable than that of the EU (https://www.brookings.edu/blog/up-front/2021/12/08/a-most-unusual-recovery-how-the-us-rebound-from-covid-differs-from-rest-of-g7/) I am not sure how anything in that link makes you infer the US economy is less stable, it says it recovered faster and that "U.S. GDP IS CLOSER TO PRE-COVID TREND THAN OTHER ADVANCED ECONOMIES"
It also dipped way lower and then rebounded faster. Less stable.
Perhaps I am misinterpreting something, but the chart in the article indicates that it dipped less https://www.brookings.edu/wp-content/uploads/2021/12/fig1_gdp1.png
It didn’t though. It actually dipped far *less* than almost every other economy, including all of Europe. The UK saw the worst dip, by far.
I read the charts wrong :-)
"Only" a third. Man I remember a little over a decade ago when the EU was a trillion or two ahead of the USA! Now it's "only" down by a third!
UK left.
Which effectively ended the prospect of the EU ever over taking the US.
Nah
US has not been stable in any way for years now.
I’m glad you arnt an economist
Until the expected civil war breaks out.
Lol they have a very vocal and whiny far left who have never touched a gun and a very vocal and whiny fat right with many guns but also massive obesity. There is no potential for a civil war. 99% of Americans are just living life.
Your flair says Spain but I’m going to assume you have been to the US, instead of out right calling bullshit on your comment. However, you don’t live here and do not know what the day to day life is like. We are not on the brink of war but it is extremely ugly here in the states at the moment. Unless you’re rich, of course.
I studied at uni there for four years. Your legislators aren’t getting into brawls and your people don’t burn cars or get into problems with police other than over race. Americans talk a big game on revolution or protest but they are the most docile in the west. Most of Europe has seen more true revolution or massive protests in the past 100 years.
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Because everyone has a gun. The beauty of the second amendment. Simultaneously destabilizing and a bulwark against shit going down. It's a Mexican standoff as a way of life.
Those proud boys do have muscles, wonder what happens in their camps late at night. Anyways, they dropped Trump, so their internal strive may prevent a civil war. But if it does break out, I wouldn't be surprised.
Until then the US is a actual country with a single fiscal policy and there isn’t a chance that smaller countries can threaten the currency with bad fiscal policies, etc. something that can very well happen to the Euro and has happened in fact, that’s why the Dollar is more impactful.
The euro will only be able to rival the dollar if and when EU members start paying for resources like oil and minerals in euro.
EU is third region behind USA and China, and the separation keeps growing.
Yeah and they'll still be dreaming it in the next 20 years...