Sunday, November 13, 2011

Why Germany is Likely to Leave the Euro and Return to the Dmark

In the below interview Prof. Markus C. Kerber, Professor at TU Berlin, provides a good overview on German thinking about the Eurozone. I don't agree with everything in the interview, for example, Kerber seems to favor a central bank that promotes price stability. In a growing economy the tendency would be for prices to fall (like they do now on personal computers, iPads and cell phones). There is nothing wrong with falling prices--in fact, it's great for consumers. Targeting price stability results in money being printed by a central bank, which creates the distortions in the structure of an economy that either will have to be supported by even more money printing (and there goes your price stability) or the money printing is slowed or stopped, which brings on a crash of the money printing caused distorted economic structure.

Further, Kerber seems to think there would be some good in maintaining the European Central Bank, if only the Germans were in charge. The great failure in this thinking is that the ECB is a cross-country multi-government power center. It is never a good idea to think that putting "the right person" (or group) in charge of a government, or a multi-governmennt, power center will solve the problem of abuse of a power center. Instead, power centers should simply be shutdown.

Power centers should be shut down for two reasons. First, getting the right person in charge of a power center, who won't do evil, is tricky enough, but this doesn't mean the successors to "the right person" won't abuse the power center. Second, once a person is in charge of a power center, especially a very important power center, enormous pressure is put on that person to meet the demands of the powerful elite, there are few that can resist such pressure. Witness, the fact that despite enormous pressure from the German people not to bailout Greece, German Chancellor Angela Merkel has already agreed to a number of bailouts because of pressure put on her by global elitists.

Further, government power centers are always about coercion. Coercion of people is never a good idea. Functions conducted by government power centers, if they truly have a demand among free people, would develop on the free market and with no coercion involved. Indeed, gold, the free market money choice, developed in the markets long before central banks came about. In other words, there is no need for a central bank to be in charge of the production of money. Governments want the power to create money, only so that they can abuse the power and print more money for their benefit and those close to power. They can't do that with the free market choice, gold.

With all this said, below is Kerber being interviewed by James Turk. The takeaway here should be an understanding of German thinking and not his promotion of Germans in charge of the ECB, or his advocacy of price stability.


  1. No because Paris will not accept being dropped into a orbit around Berlin.

  2. The Germans will not go back to the DM...The Political Terrorists will NEVER allow the EU Borg Collective to fail. Never, Ever. They will bailout the banks and depreciate the Euro and use ferocious violence in order to keep their slaves on the EU plantation.

  3. Never say "never". In 1989 nobody thought that USSR will fail and fall apart, it was forever. The Party was firmly in power, with all it million-strong secret police, fully controlled media and rubber-stamp courts. And then one nice August day all TV stations started to show Swan Lake, and mere three days later USSR became history.

    EU will fail, it has no choice. It is already running on fumes and borrowed time. And even the ferocious violence won't work, in the long run. (By now the people's democratic tyrants learned that they have a choice between running away with the loot, when the population wakes up, or playing Ceausesku, so Eurocrats will be predisposed towards running - or instant-morphing themselves into rabid nationalists, as most former-Soviet politicos did).

  4. You relate: "There are few that can resist such pressure. Witness, the fact that despite enormous pressure from the German people not to bailout Greece, German Chancellor Angela Merkel has already agreed to a number of bailouts because of pressure put on her by global elitists."

    The greatest of the global elite were convened in 1974 and met as the Club of Rome.

    Today, the political capital of a EU ECB and IMF Troika ruling the Eurozone is the vision of those 300 elite of the Club of Rome, who called for regional economic government when democratic rule would fail with the collapse of Neoliberalism.

    Neoliberalism featured the seigniorage of freedom, that is the moneyness of freedom which gave rise to inflationism.

    Neoauthoritarianism features the seigniorage of diktat, as a means of dealing with destructionism, that is dislocation, disinvestment and deleveraging out of investments made under Neoliberalism. Two examples being the Euracracy mandate that Greek debt be written down by fifty percent, and technocratic government be installed in Greece and Italy.

    The New Europe seigniorage will mandate that the accumulated debt of the Eurozone be applied to every man woman and child therein. Greeks cannot be Germans, the former are of the olive state, and the latter are of the industrious state. One is club med, and the other industrious; yet both will be one, living in a New Europe, featuring a Federal Government, a Fiscal Union, a Common Treasury, the nationalization of banks, and the ECB empowered as a bank, with the aim of enforcing austerity measures, structural reforms, pension overhauls, and debt servitude will be de rigueur. The word, will and way of sovereign EU leaders will constitute a new money, and the people will marvel and follow after it, placing their trust and faith in it. The seigniorage of diktat will have the people’s allegiance.

    Perhaps one consider the thoughts of reformed Christianity in the linked article Libertarians Desire Feedom But God Is Exercising His Sovereign Will, So That All Will Be One Living In Debt Servitude.