{"id":5786,"date":"2015-02-17T06:21:13","date_gmt":"2015-02-17T11:21:13","guid":{"rendered":"http:\/\/olduvai.ca\/?p=5786"},"modified":"2015-02-17T06:21:13","modified_gmt":"2015-02-17T11:21:13","slug":"failed-discipline-failed-reforms-and-grexit-why-the-euro-failed","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=5786","title":{"rendered":"Failed Discipline, Failed Reforms and Grexit: Why the Euro Failed"},"content":{"rendered":"<h3><a href=\"http:\/\/www.oftwominds.com\/blogfeb15\/discipline-euro2-15.html\" target=\"_blank\"><span class=\"Apple-style-span\"><i><b>Failed Discipline, Failed Reforms and Grexit: Why the Euro Failed<\/b><\/i><\/span><\/a><\/h3>\n<p><span class=\"Apple-style-span\"><i>There is no substitute for the discipline of a market that cannot be manipulated by political elites.<\/i><\/span><\/p>\n<p><b>It&#8217;s not that difficult to understand why the euro is doomed to fail.<\/b>\u00a0Given its structure, there is no other possible outcome but failure. Greece&#8217;s exit (Grexit) will simply be the first manifestation of the inevitable structural failure of the euro.<\/p>\n<div>\n<p><b>To understand why this is so, we have to start with two forms of discipline: the market and the state.<\/b>The market disciplines its participants by\u00a0<i>discovering the price<\/i>\u00a0of not just goods and services but of currencies and the potential risks generated by fiscal and trade imbalances.<\/p>\n<p><b>When nations issue their own sovereign currencies, the global foreign exchange (FX) market enforces an iron discipline on all participants.<\/b>\u00a0If a nation prints excessive quantities of its currency without boosting its production of goods and services by an equivalent amount, the FX market punishes this nation by devaluing its currency.<\/p>\n<p>The market provides unwelcome feedback to the imbalances of interest rates, credit and currency: imports become prohibitive, nobody wants to buy the nation&#8217;s bonds unless the interest rate compensates for the higher risk, and so on.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Failed Discipline, Failed Reforms and Grexit: Why the Euro Failed There is no substitute for the discipline of a market that cannot be manipulated by political elites. It&#8217;s not that difficult to understand why the euro is doomed to fail.\u00a0Given its structure, there is no other possible outcome but failure. Greece&#8217;s exit (Grexit) will simply [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[175,951,280,284,1167,431,2228,3444,1309],"class_list":["post-5786","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-credit","tag-currency","tag-euro","tag-european-union","tag-greece","tag-interest-rates","tag-market","tag-monetary-union","tag-state"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5786"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5786\/revisions"}],"predecessor-version":[{"id":5787,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5786\/revisions\/5787"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}