Why the Euro is a Doomed CurrencyBy Doug Casey However, the debts accumulated by the governments of the U.S., Japan, Europe and dozens of other countries constitute a gigantic mortgage on the next two or three generations, as yet unborn. Savings are proof that a person, or a country, has been living below their means. Debt, on the other hand, is evidence that the world has been living above its means. And the amount of government debt and liabilities in the world is in the hundreds of trillions and growing rapidly, even with essentially zero percent interest rates. This brings up several questions: Will future generations be able to repay it? Will they be willing to? And, if so, should they? My answers are: No, no and no. The should they is one moral question that should be confronted. But Ill go further. Theres another reason government debt should be defaulted on: to punish the people stupid enough, or unethical enough, to lend governments the money theyve used to do all the destructive things they do. I know its most unlikely youve ever previously heard this view. And I recognize there would be many unpleasant domino-like effects on todays overleveraged and unstable financial system. Its just that, when a structure is about to collapse, its better to have a controlled demolition, rather than waiting for it to collapse unpredictably. That said, governments will perversely keep propping up the house of cards, and building it higher, pushing the nasty consequences further into the future, with compound interest. The economy of the European Union is a constipated, sclerotic, malfunctioning entity that only registered real economic growth of 0.2% in the recent quarterassuming you can credit their numbers at all. The continent is a giant monument to socialism, where everyone believes they can live at the expense of everyone else. As a result, the average European sees his government as a magic cornucopia, a source of unlimited wealth. When something goes wrong, Europeans look to their governments to do something. With this in mind, European Central Bank President Mario Draghi made the front pages by saying he is ready to act with a whole menu of monetary policy instruments. This is central banker speak for Im willing to print an incredible amount of money in my attempt to keep my job and stimulate the economy by making people think theyre richer than they really are. Draghis money printing is a disastrously misguided attempt at creating prosperity. It will create bubbles, and cause people and companies to do all manner of things theyd never consider without the false economic signals he will send. If printing money were the path to prosperity, Zimbabwe and Venezuela would be the richest countries on earth instead of economic basket cases. Traders who take positions based on the words of a central banker are nave, and just asking for losses. Not only does the ECB believe printing money is a good thing, but theyre forced to do more, to keep the system from collapsing. This will send the value of the euro much lower; the currency will accelerate its descent toward its intrinsic value, namely zero. The euro is a sure bet to join the ranks of many hundreds of defunct paper currencies. Not one currency in todays world is backed by a commodity (like gold); theyre backed only by confidence (which can vanish like a pile of feathers in a hurricane). And, of course, the ability of governments to steal from the people. But the euro doesnt even have that going for it. The European Union doesnt have the power to tax. Right now, the Eurocrats in Brussels really only have the power to regulate. Ive long said, While the U.S. dollar is an IOU nothing, the euro is a who owes you nothing. The EU itself is a completely artificial and dysfunctional union. The Swedes are very different from the Sicilians, and the Portuguese very different from the Austrians. These people have little in common besides a history of fighting with each other. Force them together into a phony union and theyll become mutually resentful, the way the Germans and the Greeks now are. The EU was put together partly to avoid future wars, but it may turn out to be a war incubator. The European Union itself makes no real sense. Its sole good aspect, the abolition of internal barriers to the free passage of goods and people, could have been had simply by dropping barriers. Setting up another huge, costly bureaucracy in Brussels was idiocy. Incidentally, people think of these countriesItaly, France, Germany and so onas though they are fixtures in the cosmos. But they arent. In their current forms, theyre all newcomers on the stage of history. The average person doesnt realize that the country we know as Italy today was only created in 1861, a consolidation of many completely independent and very different entities that had been separate states since the collapse of the Roman Empire. Germany was only unified in 1871, out of scores of principalities, dukedoms, baronies and whatnot. Both unifications were very bad ideas; World Wars I and II are just at the head of a long list of reasons why thats true. Even today, there are separatist movements in big Western European countries, like the Basques and Catalans in Spain, and the Scots in the United Kingdom, who wish it werent quite so united. There are many others. Centripetal force will eventually tear it apart, with the EU as a whole disintegrating long before its individual partsFrance, Italy, Germany the U.K., etc.fall apart. The colors of the map are always running. The European continent reminds me of that poorly managed cruise ship that sank off the coast of Italy in 2012. It is dying financially, with all the debt bankrupting governments, businesses and individuals. It is sinking economically, weighted down with stifling regulations and taxes. It is being strangled demographically, with birth rates far below replacement. Except among African and Muslim immigrants, who are not integrating. And now, millions of migrants, who seem to expect free food, shelter, clothing and money to hang around coffee houses all day to complain. Europe has long been a hotbed of religious, ethnic and race warsquite frankly, I see the next one building up right now. So, I think the euro will reach its intrinsic value long before the dollar does. The euro, in anything like its present form, will likely cease to exist within a decade, and probably far sooner. If I had a lot of my wealth in euros, I would get it out ASAP. As it is, Im short the euro, mainly via selling naked calls. My favorite alternative for protecting wealth, of course, is precious metals: gold and silver. Draghi, who deserves the same fate meted out to Mussolini, is acting in a completely predictable manner. If youre not out of the euro yet, get out as soon as possible. Casey Research Editors Note: In truth, central bankers are the primary cause of most of the harmful distortions in the economy. Think unlimited money printing, interest rate manipulation, the boom/bust cycle, propping up too big to fail institutions with bailout funds, the War on Cash, cronyism in the financial industry and negative interest ratesjust to name a few. Central bankers are the biggest threat to your financial well-being. Period. They are playing with fire and inviting a currency catastrophe. Most people have no idea what really happens when a currency collapses, let alone how to prepare How will you protect your savings in the event of a currency crisis? This video we just released will show you exactly how. Click here to watch it now. Plenty of Money, quit all the wars, send everybody home! good riddance I was hoping. The sooner the zentral (central) banks collapse the sooner a thousand years of peace will commence. Based on the parameters used in this article, the US would also be prime for disintegration. Remember that it almost dissolved in 1865 but was held together by violence. What? Do you think Israels nukes are reserved for European countries that dont want to conform to the program? Huh? 