Warren Mosler, The Euro: past, present and future.

YouTube has the video Warren Mosler, The Euro: past, present and future. The Crossroads Workshop 1 in Zurich. This was published on Mar 29, 2013.

The euro assumed its position on January 1, 1999. Representatives of the prospective member nations achieved political consensus, as manifested in the Treaty of Maastricht. The ‘no bailout’ directive for the new ECB (European Central Bank) emerged as a pillar of the political imperative, intended as protection from a genetic proclivity toward fiscal irresponsibility. Unfortunately the naked heel is but a magnet for the financial market’s arrows.

I don’t know how you could make the explanation any simpler. Still, people cannot believe this when they hear it. The explanation is that people decide on what they are going to believe by gut reaction, and then the search for information or ignore information as necessary to confirm their pre-chosen beliefs. I find the first step is to start to wonder if this guy has something to tell you that is worth understanding. That’s how I started to understand Modern Money Theory.

The only issue I see with this presentation is that the emphasis is too much on monetary policy and not enough on fiscal policy. As Keynes explained in great detail, you can make all the money you want available to the private sector, but you cannot make them spend it on what the economy needs. There are perfectly rational reasons for this behavior that I won’t go into here. The upshot is that when the economy gets stuck in this situation, only direct spending by the government on the necessary items can get the economy going again quickly.

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