The Euro: A Chartalist Critique
Abstract: The aim of this article is to develop a Chartalist critique of the prevailing economic theories that have informed the original design of the Eurosystem. In order to understand the structural dynamics of the current crisis, it is necessary to examine the longstanding internal contradictions that the system has inherited from its inception under the Maastricht Treaty of 1992 and the neoliberal strategy, which has governed its evolution. In its bare essentials, the euro lacks the backing of a coherent sovereign power. More specifically, the article argues that this national/supranational dichotomy prevents a more unified response to the current debt crises engulfing the peripheral countries of the Eurozone.
The Four Achilles' Heels of the Eurosystem : Missing Central Monetary Institution, Different Real Rates of Interest, Nonmarketable Securities, and Missing Lender of Last Resort
The short history of the euro, the common currency of the European Monetary Union (EMU), seems to be a success story. Nearly six years after the start of the EMU on 1 January 1999, the euro, on 10 November 2004, broke the psychological benchmark of US$1.30 to the euro. After the all-time low in October 2000 of $0.83 to the euro, this is a remarkable turnaround indeed. And as the share of the euro in official foreign exchange reserves increased by 20 percent between 2000 and 2003, euro enthusiasts dream that the time is near when the euro will challenge the role of the dollar as the dominating world currency.1 However, serious doubts have to be raised. They are part and parcel of the structure of the Eurosystem a term surprisingly only a few euro experts know about, because most of them think that only one central bank exists in EMU, the European Central Bank (ECB). Therefore, they do not know what the Eurosystem really is about: it is the decentralized central banking system of EMU, responsible for the issue of the euro and determining its monetary policy. It consists not only of the ECB but also of twelve national central
Money Lending on the Periphery of London, 1300–1600
Money lending was an essential part of the local and regional economies of England during the later medieval and Tudor periods. Cash was required for purchases of goods, animals, or land, payment of rents and taxes, and the wages of hired workers. People who lacked money to cover these expenses between 1300 and 1600 commonly resorted to borrowing. Borrowing thus might be undertaken for purposes of either consumption or investment. Further, during much of the later medieval period and occasionally during the Tudor years specie was in short supply. Even a man of some wealth might find himself without sufficient currency on hand to cover his immediate needs. In nearly all cases late medieval and Tudor loans were for short terms, for periods ranging from a few weeks to six months. Interest was normally charged on local loans, although the amount was concealed due to the Church's prohibition of usury. Money lending was particularly important within commercialized areas—the major cities and their economic hinterlands. The region lying within a radius of about twenty miles from London formed one of the most thoroughly commercialized parts of the country. By the fourteenth century people living on the periphery of the capital were deeply involved in furnishing consumer goods to London. Agriculture among middling and larger tenants focused upon market sale; craftsmen sometimes sold to citizens as well as to their own neighbors. Late medieval London was surrounded by a ring of at least thirty-two market towns located within twenty miles of the capital. These markets served to channel grain, animals, fuel, and craft items into the city while also functioning as centers of trade for their own areas. In the market communities around London the extent of trade was unusually large and the economic sophistication of local people unusually high. Cash was the medium of accounting for all transactions and the medium of exchange for the great majority of them. It is not surprising that money lending played an especially significant role in this area.