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Dangerous Times: Milton Friedman just won his euro bet
AmericanThinker.com ^ | 5/11/2013 | James Lewis

Posted on 05/11/2013 7:13:12 AM PDT by RoosterRedux

Even as President Obama is following in Eurosocialist footsteps, the 14-year utopian experiment on a single currency is collapsing. The architect of the euro just ran up the white flag on the biggest policy mistakes in history. Former German Finance Minister Oskar Lafontaine called his own brainchild a "catastrophe".

"The economic situation is worsening from month to month," he wrote on his Left party blog. "unemployment has reached a level that puts democratic structures ever more in doubt."

"Catastrophe" is the right word.

Today Greece is suffering more than 50% unemployment. That's worse than the Great Depression in the US. This winter in Athens, people cut down the trees in the city parks for firewood. They couldn't afford to buy heating fuel. The resulting wood smoke created the worst smog in decades, obscuring even the Parthenon. About half of the younger people are leaving the country.

Ireland, Spain, and even France are in distress. The Netherlands economy is the worst in half a century. Only Germany is still going strong, and that fact is creating deep resentment. Germany can afford the euro. Other countries can't. The industrious Germans make the euro expensive, while being shackled to the same currency makes Greek and Italian exports harder to sell. A single, one-size-fits-all currency can't adjust to market conditions in widely varying spocieties and economies

(Excerpt) Read more at americanthinker.com ...


TOPICS: Business/Economy; Editorial; Foreign Affairs; Germany; News/Current Events; Russia; United Kingdom
KEYWORDS: europeanunion; france; germany; greece; ireland; italy; miltonfriedman; netherlands; oskarlafontaine; russia; spain; unitedkingdom

1 posted on 05/11/2013 7:13:12 AM PDT by RoosterRedux
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To: Toddsterpatriot; Mase; expat_panama; 1010RD
Milton Friedman has done more damage to the United States and its citizens than any other economist.

Still chuckling over that one.
2 posted on 05/11/2013 7:16:33 AM PDT by 1rudeboy
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To: RoosterRedux

I always knew it would collapse: It’s fiat nothingness.


3 posted on 05/11/2013 7:17:48 AM PDT by Arthur McGowan (If you're FOR sticking scissors in a female's neck and sucking out her brains, you are PRO-WOMAN!)
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To: SAJ

Ping.


4 posted on 05/11/2013 7:21:56 AM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: RoosterRedux
'Today Greece is suffering more than 50% unemployment.'

Absurd, the author is wrong. Youth unemployment is higher than that, but not overall.

50% tends to bring about revolutions, riots, revenge, take your pick.

5 posted on 05/11/2013 7:22:02 AM PDT by Theoria
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To: Arthur McGowan

Tower of Babel redux.


6 posted on 05/11/2013 7:27:26 AM PDT by SWAMPSNIPER (The Second Amendment, a Matter of Fact, Not a Matter of Opinion)
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To: FReepers
Dig out that change jar.
Every little bit helps.



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Support Free Republic

7 posted on 05/11/2013 7:33:17 AM PDT by deoetdoctrinae (The Old White Flag Republicans can go straight to He// and take their pal Obama with them!)
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To: Theoria
"Spain's out-of-control unemployment is matched in Europe only by Greece, which posted a 27.2% jobless rate for January, the most recent month available."

I don't know if Greece cooks the books like the USA does, but 27.2% is really bad but is not 50%.

8 posted on 05/11/2013 7:36:20 AM PDT by jpsb
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To: Arthur McGowan
It all must collapse so as to have an equal starting point. It's why the Marxist Democrat party along with some Rinos are trying to overwhelm and collapse our currency.

These people want one world money so they can tax even the machete loggers of Zimbabwe.

9 posted on 05/11/2013 7:37:59 AM PDT by liberty or death
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To: jpsb

I believe the 50% is only the youth rate.


10 posted on 05/11/2013 7:40:42 AM PDT by EEGator
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To: RoosterRedux
The architect of the euro just ran up the white flag on the biggest policy mistakes in history. Former German Finance Minister Oskar Lafontaine called his own brainchild a "catastrophe". "The economic situation is worsening from month to month," he wrote on his Left party blog. "unemployment has reached a level that puts democratic structures ever more in doubt."

What he neglected to add to his appraisal: "Isn't this wonderful?"

11 posted on 05/11/2013 7:42:56 AM PDT by immadashell
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To: jpsb

If they do “calculate” their rate like we do and admit 27.2%, it probably is really 50%


12 posted on 05/11/2013 7:43:47 AM PDT by jospehm20
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To: 1rudeboy
>> Milton Friedman has done more damage to the United States and its citizens than any other economist.
>
> Still chuckling over that one.

I'll agree with it; he did come op with the idea of income-tax withholdings.

Link 1
Link 2
Link 3
Link 4

13 posted on 05/11/2013 7:49:42 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: RoosterRedux
Apres nous, la deluge. Meanwhile everybody is out for themselves. Will somebody tell Obama? Would he care?

Image and video hosting by TinyPic

14 posted on 05/11/2013 8:05:30 AM PDT by newheart (The worst thing the Left ever did was to convince the world it was not a religion.)
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To: RoosterRedux
A single, one-size-fits-all currency can't adjust to market conditions in widely varying spocieties and economies

It's not the currency; money is just a medium of exchange. It's the foolish behavior of Greece, et al. which has caused the crisis. They all overspent and overborrowed.

There is no magical reason why the Euro works just fine in northern Europe but not in the South. The author is suggesting that the only way out of the crisis is for those countries to rob their citizens through inflation.

Of course, that's quite stylish these days.

15 posted on 05/11/2013 8:11:41 AM PDT by BfloGuy (Don't try to explain yourself to liberals; you're not the jackass-whisperer.)
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To: OneWingedShark

In wartime, when a government and people are fighting for their survival, many measures are appropriate that are not justified in time of peace. As the US Constitution plainly agrees.

To put it in its bluntest form, which is worse, income tax withholding or invasion and conquest?

The US never actually faced that stark a choice, but then nobody really knew that at the time.


16 posted on 05/11/2013 8:12:04 AM PDT by Sherman Logan
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To: BfloGuy
It's not the currency; money is just a medium of exchange. It's the foolish behavior of Greece, et al. which has caused the crisis. They all overspent and overborrowed.

Au contraire. The Greeks and others were given massive incentives for their overspending and overborrowing. As most people know, when incentives are given most people will respond to them.

The answer is not to expect people tp be nobly self-denying and ignore the incentives, it is to avoid providing the incentives in the first place.

Multiple currencies act as a kind of free-market check and balance. Nobody would have lent the Greeks all this money if they were going to be paid back in drachma, subject to devaluation if too much was printed. Being paid back in euros backed by Germany, no problem!

17 posted on 05/11/2013 8:16:24 AM PDT by Sherman Logan
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To: 1rudeboy

:: Friedman’s globalist economics totally focus on consumption and ignore the problem of production. ::

Let’s turn that around a bit...
Liberal economics totally neglect that citizens participate in production (e.g., “work) to indulge in consumption.

Uncle Miltie was right. So was Hayek’s treatise on the validity of a government run economy (AKA, The Return to Serfdom).


18 posted on 05/11/2013 8:24:07 AM PDT by Cletus.D.Yokel (Catastrophic Anthropogenic Climate Alteration: The acronym explains the science.)
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To: Arthur McGowan

It would be nice to have a way to seek out and sort FR articles from around a decade ago. Several of us had long discussions about subjects such as the foolishness of the euro, islamofascist terrorism, immigration, and other subjects that would be great to bring back. I know many here were expounding on the foolishness of the euro and the reasons it would fail. There are many who can say “I told you so...” who would love to have the evidence to point to, as well as to refresh our minds on the reasoning we relied on.


19 posted on 05/11/2013 8:27:50 AM PDT by AFPhys ((Praying for our troops, our citizens, that the Bible and Freedom become basis of the US law again))
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To: 1rudeboy
Unbelievable. Who was that guy anyway?

What's truly amazing is that many on the forum defended that statement. They've probably spent a lot of time watching Phil Donohue.

20 posted on 05/11/2013 8:31:38 AM PDT by Mase (Save me from the people who would save me from myself!)
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To: OneWingedShark

I think that’s peanuts compared to the notion government can tax and spend us into prosperity (Keynes).


21 posted on 05/11/2013 8:42:18 AM PDT by Cyber Liberty (I am a dissident. Will you join me? My name is John....)
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To: Sherman Logan
In wartime, when a government and people are fighting for their survival, many measures are appropriate that are not justified in time of peace. As the US Constitution plainly agrees.
To put it in its bluntest form, which is worse, income tax withholding or invasion and conquest?
The US never actually faced that stark a choice, but then nobody really knew that at the time.

Which is worse: to be an invaded, possibly conquered, people... or to have a government which forces either (A) widespread theft, or (B) every employer to help perpetrate fraud upon its employees?


It's an either-or depending on when the withholding occurs in (a) it occurs when the money is the employee's, and in (b)when the money is still the employer's.
(a) -- Because the money was taken, by threat of force, before it entered his hand.
(b) -- Because the employer is not paying the agreed upon wage.

22 posted on 05/11/2013 8:45:13 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: Cyber Liberty
I think that’s peanuts compared to the notion government can tax and spend us into prosperity (Keynes).

Keynes model wouldn't work if the people had to pay the government directly and explicitly -- because in that case it's owned money... compare that to the mentality that people have WRT tax-returns (i.e. that the government is giving them money).

23 posted on 05/11/2013 8:48:19 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: Sherman Logan
Multiple currencies act as a kind of free-market check and balance. Nobody would have lent the Greeks all this money if they were going to be paid back in drachma, subject to devaluation if too much was printed. Being paid back in euros backed by Germany, no problem!

That's correct. Furthermore, the implicit Euro backing of Greek debt creates a carry trade. The big financial institutions borrow Yen or dollars at ridiculously low rates and "invest" in Greek bonds at higher rates. It is of course not an investment at all but a speculative bubble destined to collapse. Next the Greek government spends their new found windfall on socialist waste. They also call that "investment" but it is just transfer to the wealthy and some to the not-so-wealthy to make it look properly socialist.

The next step is 100% inevitable, Greek bonds plunge as the "investors" suddenly realize that a basket case has no hope of paying them back. The plunge is greatly speeded and enhanced by threats of haircuts, etc. Finally German taxpayers get suckered in to paying the old bonds. They do a little pretend austerity for a while. After a long enough time the Greek bonds are considered safe enough for another round of carry trade.

The effect of carry trade bubbles and crashes on any smaller economy is catastrophic. Business cannot invest, taxes rise and the people demand even more socialism.

24 posted on 05/11/2013 8:54:34 AM PDT by palmer (Obama = Carter + affirmative action)
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To: OneWingedShark
Which is worse: to be an invaded, possibly conquered, people... or to have a government which forces either (A) widespread theft, or (B) every employer to help perpetrate fraud upon its employees?

Ask the Poles or the Filipinos.

Anybody who can seriously compare being conquered by an Axis power to our present political problems should not themselves be taken seriously.

25 posted on 05/11/2013 8:57:34 AM PDT by Sherman Logan
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To: RoosterRedux

Quote:

// “The economic situation is worsening from month to month,” he wrote on his Left party blog. “unemployment has reached a level that puts democratic structures ever more in doubt.” //

Destroying democratic structures was the goal. I read that as glee.


26 posted on 05/11/2013 9:02:39 AM PDT by Fitzy_888 ("ownership society")
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To: OneWingedShark

I think we’ll just have to disagree on which is the original sin. I agree that there would be a lot less tolerance of what the government does if people had to write checks for it (rap on Friedman), but the fact the government does these things in the first place is because people have this notion that government can “smooth out” the business cycle with spending (rap on Keynes). Which came first, the chicken or the egg?

I’m not in the mood for getting into a discussion of who sucks more.


27 posted on 05/11/2013 9:12:44 AM PDT by Cyber Liberty (I am a dissident. Will you join me? My name is John....)
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To: Sherman Logan
Anybody who can seriously compare being conquered by an Axis power to our present political problems should not themselves be taken seriously.

Because, WRT tyranny, "it can't happen here"?
Honestly, comments like that make me think you haven't paid any attention to the immigrants from communist/socialist countries... or those that survived WWII... when they were talking about their unease at the current administration.

28 posted on 05/11/2013 9:24:20 AM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Alas, the EU isn’t on the verge of collapse. Their economy is weak because the price of crude oil has been engineered higher by OPEC, and their good friends and close allies, the “greens” like Al Gore.

Thanks RoosterRedux.


29 posted on 05/11/2013 9:30:39 AM PDT by SunkenCiv (Romney would have been worse, if you're a dumb ass.)
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To: Army Air Corps; expat_panama; Toddsterpatriot
Nothing to say. I read Friedman's two extended pieces on Maastricht and the Euro in 1995 and 1997, respectively. He was correct in his views as expressed in those two pieces, indeed, almost spookily so, given subsequent events.

The only reason that the Euro hasn't crashed and burned (yet) is that every major central bank in the world is drinking the pseudo-Keynesian, Krugmanian Kool-Aid; to wit, that creating money out of thin air is the ONLY way to save the big banks (why do they require saving, hmm?) and keep "growth" (retch, choke) going. They're all playing that game we played as kids, "Pass the Trash" or "Screw Your Buddy", but with untold trillions at stake instead of pennies.

Thus, the mad rush to print money, thence to inflate -- the irresponsible debtor governments' universal, all-purpose solution to reduce (haha) or get out of (chortle!) debt.

The only remaining point of discussion is the precise timing of when this corrupt, Goldbergian system blows. Pays your money, takes your choice.

30 posted on 05/11/2013 10:15:24 AM PDT by SAJ (What is the next tagline some overweening mod will censor?)
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To: AFPhys

I guess you can just keep scrolling down.


31 posted on 05/11/2013 11:24:11 AM PDT by Arthur McGowan (If you're FOR sticking scissors in a female's neck and sucking out her brains, you are PRO-WOMAN!)
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To: Mase
The econ threads on FR really took a turn toward the retarded over the past few weeks.

We had the "US corporations don't pay too many taxes thread," the "Milton Friedman was a Keynesian thread," and the weekly "let's raise taxes on ourselves as individuals, in order to increase prosperity" thread, among others.

32 posted on 05/11/2013 11:46:29 AM PDT by 1rudeboy
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To: 1rudeboy
Retarded is an apt description. My favorite, at least recently, is Government deficit spending, pursued judiciously, remains the single most effective tool we have to fight against mass unemployment caused by severe recessions.

Krugman and Keynes march on. Might be a good time to re-post those two fabulous rap videos - Keynes vs. Hayek. Now that was great stuff.

33 posted on 05/11/2013 2:14:18 PM PDT by Mase (Save me from the people who would save me from myself!)
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To: Sherman Logan
Au contraire. The Greeks and others were given massive incentives for their overspending and overborrowing. As most people know, when incentives are given most people will respond to them.

There were also "massive" incentives not to engage in overspending and overborrowing: fiscal stability of their countries being only one. You are excusing totally irresponsible behavior because the opportunity was there.

The answer is not to expect people tp be nobly self-denying and ignore the incentives, it is to avoid providing the incentives in the first place.

The Germans and the Dutch, for example, are not self-denying. They both have prosperous and growing economies. Their citizens have the highest standards of living on the Continent. They had the same, as you call them, incentives.

They simply aren't corrupt and opportunistic enough to avail themselves of them.

Multiple currencies act as a kind of free-market check and balance. Nobody would have lent the Greeks all this money if they were going to be paid back in drachma, subject to devaluation if too much was printed. Being paid back in euros backed by Germany, no problem!

The single currency -- had its guiding directives been followed -- was designed to impose fiscal discipline on the profligate states. It could have, much as gold functioned as a global currency at the end of the 19th century.

What you are suggesting, a return to national currencies, will only re-create the incentives to overspend. Except this time, they'll do it through inflation rather than borrowing. It's still irresponsible and it's still wrong.

Politicians always and under any monetary regime have the incentive to overspend. It's called re-election. The Euro didn't create that.

34 posted on 05/11/2013 3:01:04 PM PDT by BfloGuy (Don't try to explain yourself to liberals; you're not the jackass-whisperer.)
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To: OneWingedShark

Point taken. At least Friedman admitted his mistake. Unlike the author to the thread I posted, who doesn’t mention it at all.


35 posted on 05/11/2013 5:48:56 PM PDT by 1rudeboy
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To: SAJ; 1rudeboy; Toddsterpatriot; Mase; Wyatt's Torch; 1010RD; dennisw; SampleMan
Interesting topic but the piece is mostly devoid of any econ savvy. 

The article is confused as to why so many European countries are falling apart; it's either the Euro, trade deficits, or it's tax'n'spending that's the root-cause bad idea.  Hint: the Euro's not the problem, the trade deficit's not the problem, it's tax'n'spending.  Austria has an unemployment rate of around 4%.  They also have a huge 'trade deficit'.  What they don't have is tax'n'spending and instead of Keynes they got Hayak.

"James Lewis" is a alias and there's no bio on the guy (gal?) and my guess is he/she probably never took Econ101.  My reasoning is Lewis is an idiot to think that devaluing the currency can help the economy by boosting exports.   Reality is that exchange rates don't affect markets, it's markets that control exchange rates. 

Lewis really needs to understand that government's not the solution, it's the problem.

36 posted on 05/11/2013 7:11:26 PM PDT by expat_panama
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