The present euro system is on its last legs. A new European Currency will have to be built. How should Europeans create a Supranational Economic and Currency System? It should be fairly obvious that countries and nations that have fought each other for more than two thousand years need a system tailor-made for them. It is no use going to theorists living on other continents who are ignorant of Robert Schuman, one of France’s most successful Finance Ministers initiating thirty glorious years of postwar growth, and how he brought about a system that ended war — including Europe’s expected Third World War.
The euro’s fatal flaws arose because the politicians decided in the 1960s, 1970s and 1980s to abandon supranational democracy and the supranational philosophy that built the Community. Under the arrogant impulse of Charles de Gaulle who wanted to destroy the Community, the other European politicians succumbed to his closed door Council. They acquiesced to the non-democratic easy route of ‘package deals’. Vote-getting Wine Lakes and Meat Mountains for farmers were paid for by European taxes and tariffs. This has led to our present Politburo Council system, where a cartel of political parties has replaced de Gaulle and his spineless European cronies. They FEAR openness in the Council as it will unfreeze moves to further democratic progress.
The European Community system must have a currency based on supranational currency principles. North American federal ideas won’t cut the mustard. For decades economists have said that a European Currency must be based on a Optimal Currency Area. This idea is based on two fallacies:
- (a) it assumes that the European Community will act like a federal system such as either economic theorist Robert Mundell‘s native Canadian federation or the USA.
- (b) it relies on the Neo-Hedonist presumptions about the economy and currency.
For example, the US currency is minted by the Fed (the privately owned US Federal Reserve — which is neither federal nor a reserve). Their mission is to print money only on the basis of encouraging growth and employment for Americans. Further dollars are created by the banking and speculative institutions which try to multiply loans for all. The massive avalanche of dollars that is being churned out by the Fed has had in practice little effect on either growth or employment. It has seen a massive flight of jobs abroad to places like China and other parts of Asia. Its own growth has only been kept above zero by massive borrowing. This is hardly healthy and will lead to ‘an adjustment’.
The USA, now shackled by huge debts and overdraft from the other world economies, has become a dangerous and explosive debt overhang for the rest of the world. China, Japan, Russia and other major economies are avoiding US Treasury Bonds and divesting. Why? because of the coming massive inflation. The USA is likely to go through even worse crises than it has so far. This was clear several years ago. The world will also suffer. About 70 per cent of dollars circulate OUTSIDE the USA.
The European Community system is different from the North American experience. It is based on remedying the flaws that Robert Schuman and others saw in those systems and creating a better one. The Canadian and US federations are distinguished in the sense that because of their respective constitutions the first tends to stimulate the growth of governance powers to the provinces away from the centre, while the second has a tendency to centralize and grab powers from the constituent States, both where the constitution allows it and too often where it would seems to forbid it. The European Community system is designed — when it works democratically — to reinforce the nation State and build a higher supranational level, based on law and economics, above it.
America is suffering from toxic assets from the sub-prime property bubble scam, junk bonds and complicit credit rating agencies and a central banker with little democratic control. Europeans have most of the same plus a wide variety of political and statistical corruption in a ‘European Union’ — not a democratic Community. It is led by the nose by the secretive EuroGroup (that meets in the dead of night) and the closed door European Council which decides policy in a democratic vacuum for the public.
Both sides of the Atlantic are now crying: ‘Growth, Growth, Growth. That will change all our fortunes and the people will forget our mischief.’
The Neo Hedonists make no distinction between toxic (or crooked) deals and a healthy economy based on what should be obvious to all: The economy is not a separate or independent creature but it is connected to the real world, real people and goods and has to obey universal and supranational values. Any operation that is based on Ponzi schemes, pyramid selling and ignores morality will end in collapse, trauma and catastrophe.
The European Community is not based on Neo Hedonism as far as its founding philosophy is concerned, nor is it a model that can be shaped by either American, Canadian, Mexican or other federal systems. Whatever politicians try to do against those founding principles and philosophy will end unhappily. At the moment they are trying out all the wrong alternatives (mostly against supranational democracy and in line with a Politburo or political cartel approach).
Their failures are apparent to all but themselves. Thirty years of political corruption, behind closed doors, is now being exposed. Unfortunately all Europeans will have to pay for this mess.
The Community is not designed to be a centralizing governance system, but a purifying system for national democracies that willingly participate in it. Schuman said it was designed to de-toxify European relations.
That must include money, detoxifying it from private and governmental fraud and corruption. But in the 1990s the politicians threw the supranational rule book for a successful currency out of the window. They decided to base the euro on other fanciful ideas. They belittled and sidelined the Werner Report that in 1970 traced the steps needed for Monetary Union. This was written byPierre Werner, Luxembourg Prime Minister who knew Schuman, and among others, the later governor of the Bank of France, Bernard Clappier, Schuman’s former directeur de Cabinet. He acted as Chairman of the key Monetary Committee.
The politicians based the euro on the Delors Report of 1989. That did not even recognize the five key institutions of the European Community and understand how they should develop to take on the responsibility of a European Currency. It spent a good deal of ink explaining why the supranational criteria and conditions should not be applied, and ignoring others.
The Community made its first major contribution in a way that no federal system has succeeded in doing: it made war impossible between its Member States. But this is only the first step in the process of a supranational Community.
The politicians of the Delors era looked into the Treaty of Rome with its Economic Community Treaty to find out how to create a European Currency. In vain. It is not there. The principles are set out well before the Treaty of Rome in the founding documents and treaties. They set out the principles of the Single Market of 1953 and the way to currency union. They apparently did not even seem to analyse the first Community — which defined both the Economic Community and Euratom.
The founding principles are well outlined in the Schuman Declaration, its democracy in the great Charter declaration, that the politicians still refuse to publish. It provides a clear outline of future developments including a Single Market, single economy and Single Currency based on enhanced democracy and justice.
The aims spelt out in the Schuman Declaration are to serve all Europeans and the world. They include raising employment, increasing innovation and building a stable European currency. Check it out!
- National decisions made together with supranational independent arbitration would become enforceable international law
- Equality, open information systems, better treatment of workers
- Raising living standards, promoting peace, aiding developing countries
- Was an aim of the Coal and Steel Community to create a single market?
- Goods would circulate within the Community free of customs duties
- The new Community was neutral about nationalizations or private ownership
- The new Community drew on the experience of the International Ruhr Authority
- Do a Common Market and a common currency figure in the proposal?
- Is a European economic community part of the proposal?
- Is monetary union implied in the original proposal?