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Will France Quit the Euro?

French Francs

In mid February Rudo de Ruijter of the le Blog Économique et Social writing on the Marianne website described this as one possible alternative:

"In the view of some, the homogeneity of the Eurozone prevents troubled member states from ever repaying their national debt. Europe is a far too a heterogeneous geographical and economic entity for each country to be in the same monetary straitjacket…

The euro is very practical, but it has created millions of victims. Far better would be if Europe were to move towards a system of state-produced currency. The Euro has an insoluble problem. Even if presently heavily indebted countries do manage, by dint of severe austerity, to cut public sector spending, their debts will very predictably recur again (rather like a yo-yo dieter). This is because these countries are victims of a fundamental flaw in the Euro.

Even before it started economists warned that a single currency could work only if all participating countries were economically homogenous… the founding countries that signed up to Euro agreed to cut their public debt to 60% of gross national product (GNP) and their fiscal deficit to below 3% of GNP on the basis that exceeding these limits represented a threat to Euro stability. (Note: since the banking crisis broke neither target has been observed by anyone in the Eurozone).

Today 20 of the 27 EU member states cannot meet these budgetary criteria … Understanding that the Euro will fail is one thing. But advocating we all simply return to our previous currencies is, in my view, a very bad solution. Certainly we will need new national currencies, but if we are to avoid past mistakes, we need that new hard currency to be issued by each State.

To understand why State money is so important, we must understand what money is and how it works. Money is neither present in circulation, nor managed by governments. Instead almost all money existing today was put into circulation by commercial banks. In fact, you have no money to your bank account, just electronic digits. These figures are a "monetary illusion". Your bank statement mentions how much the banker holds for you, but only a tiny fraction of that money actually exists (this is known as fractional banking) … It is this deception, run by the banking system, which allows bankers permanently to inflate the money stock, a very dangerous move as our societies have now discovered.

The bankers have corrupted all the world's currencies with secret accounting tricks. The Euro is no exception. Today, less than 5% of all the money is real money in the form of banknotes and coins. The rest is artificially created by banks and exists only as digits in a an electronic bank ledger ….

The growing mass of money creates a situation where everything can be bought, even the state. In many countries financial groups have already purchased utilities -- gas, electricity, water, public transport, posts, telecommunications - and converted them into continuous revenue streams…

This is a continuous process. Bankers and the financial elite are taking more and more investment decisions that shape our society, and pushing aside the state - which in turn is losing power and control.

The Euro is a currency owned by the European Central Bank (ECB) in Frankfurt. The ECB acts as the central bank of participating countries. Despite their names, which might suggest they are state institutions (Deutsche Bundesbank, Banque de France, etc.), these institutions are all independent of government and mostly run by private boards. Despite it position as a private institution, the ECB is an official organ of the European Union.

Through Article 7 of the European System of Central Banks (ESCB) and section 107 of the Maastricht Treaty, the ECB enjoys total independence. Note that this independence does not come from any organizational or logical necessity, it is purely a result of the belief that only independent central bankers are able to manage the money system properly. Well, if we do not question this belief today, when will we ever? ...

Most people think money is issued by the State. That indeed is what should happen. Money should belong to society and not the private bankers. This is the only way to get a system of honest money and a government that does not depend on bankers….

We can end this expensive and dishonest system by creating a state bank, which will be the only bank authorized to create money in the country. It will create the money needed for loans to business and individuals and for advances to governments for national budgets. As for private bankers, they would be barred from creating assets without having a corresponding amount of hard cash reserve. If bankers wanted to, they could operate as intermediaries between the state bank and the public in offering credit. For this they would receive a fee but not earn interest. They would also manage customer accounts in the name and on behalf of the state bank …

Politicians try to scare people by claiming that it would be extremely expensive to leave the euro, it would put economic development back by years and so on.

Well, for starters, when the present EU states joined the euro and set up a new currency countries did not stop trading! And if a country opted now for state money, the costs would be primarily organisational and relatively small compared to the gains. All the money necessary for the change could be created from nothing by the state bank. All banknotes in circulation in the country could be purchased by the state bank by issuing new money. The euro could be set aside as a strategic reserve or used to pay for imports…."

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