L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Institute of Bard College, NY.
MODERN MONEY THEORY AND EUROLAND: WHAT IS WRONG WITH THE EURO?
The EMU area has been in crisis since 2008, with no end in sight. Centrist parties are facing challenges from the far right as well as from the left. Greece has elected a populist party that promises to end the austerity forced by the Troika, and Spain is on the verge of doing the same. There is growing talk of the very real possibility that one or more countries will leave—or be forced out of—the EU. It is becoming obvious to all but the blind that the problems faced in the EMU have little to do with “profligate spending” by nations on the periphery.
Modern Money Theory has long argued that the EMU was designed to fail. This is not a Greek problem. It is not an Irish problem. It is not an Italian problem. It is a Euro problem—and the inevitable crisis could have been foreseen (indeed was foreseen) even before the launch of the new currency. When member nations gave up their own currencies they effectively adopted a foreign currency. By divorcing fiscal policy from their currency, the member nations became users—not issuers—of the currency. This left them unable to deal with financial crises or recessions. They had to turn to the Troika for help—but because the leadership of the European Union has adopted Neoliberalism, the only solution considered is austerity.
This presentation will offer a way out, based on the understanding provided by Modern Money Theory.