US lesson for EU on a Single Currency
FEBRUARY 2011: Whilst the euro is in deep trouble, another continent-wide single currency, the US dollar, is facing its own possible breakup.
That's because it is continually trying to cope with the strains of imposing a one-size-fits-all currency on a collection of diverging economies make themselves felt in the current global economic crisis.
Moves are afoot in the State Legislatures of South Carolina, Georgia and Virginia to pull out of the US dollar and set up their own local State currencies, whose values can better reflect their own economic needs, rather than being imposed from above.
When the European Single Currency, which became the euro, was first mooted, economists warned it would fail because it was trying to set up one currency for many separate economies. When the needs of those separate economies conflicted, either some economies would be badly damaged by being forced to follow suicidal policies for them which made good sense for other member countries, or the single currency would be torn apart. The first has now of course happened and the second will quite possibly follow.
It now seems the US dollar is in trouble. Even though it is the currency of a single nation, whose people all speak the same language and therefore find it much easier to move around to other parts of the currency area to follow available work.
Culturally, politically and economically Georgians have a lot more in common with Californians and New Yorkers than Irish folk have with Germans or Greeks have with Frenchmen. If even then their single currency is showing signs of strain what hope is there for the euro?
If the US can’t keep one currency, the EU certainly won’t!
