“Eurovision” is more than a song contest. The term also captures the aspirations of a coterie of politicians determined to complete the transformation of common market principles into their grand vision: United States of Europe.
Promoting harmony on a continent with a war-torn history is laudable, but it does not demand an irreversible commitment to full political union, necessitating the merger of a collection of independent nations without regard for unique differences in culture, natural resources, language, institutions, economic history and innate enterprise.
Elsewhere the opposite is happening. The mighty Soviet “Union” is no more. Decolonisation has been in process for over 60 years. Even the United Kingdom is in the throes of internal devolution.
Imposing a common currency
Although the idea of Europe as a single state has always been a vanity project devoid of rational basis, its protagonists knew there could be no better way to enforce union than to adopt a single currency: the rest would, somehow, follow.
The single currency straitjacket prevented markets from making adjustments
Although predictable, the result was not what they wanted. The single currency straitjacket prevented markets from making adjustments reflecting historic and prospective strengths and weaknesses. Currencies of countries with huge differences in productivity and state spending appetites – such as Greece and Germany – were rendered unadjustable because their currency is shared.
The EU’s primary justification was maintenance of peace, yet it now risks responsibility for opening old wounds. Even Germany, whose economic prowess is the fruit of technological brilliance and sheer hard work, now faces taunts of trying to establish an economic Fourth Reich. Why? Only because its citizens are calling a halt to picking up the tab, yet again, for the wanton profligacy of others.
Economic law cannot be gainsaid. Entrenched overvaluation of the currency and cheap interest rates opened up a borrowing binge that blinded revellers to an inescapable nemesis: the party would not only stop, but have to be paid for.
Central banks resorted to the contrivance of “quantitative easing”, a euphemism for generating, out of thin air, scarcely believable amounts of “pretend” money. Its real name is counterfeit. Its effect is inflation.
When Sir Isaac Newton was Warden of the Royal Mint he reviled counterfeiters with a passion. He pursued them relentlessly – in many cases all the way to the gallows. Governments now indulge with impunity.
Even barter is better
Aristotle preferred barter because it puts equality, not profit, at the heart of exchange. How would he view the invention of instruments for generating fantasy money, “secured” on even more fantasy money?
Remember Nick Leeson, the currency trader who destroyed Barings Bank in 1995? “I became blinkered to all that was happening around me. The important thing was to keep the myth…alive at all costs. Very quickly a form of tunnel vision descends – however bad it gets, failure is still never an option.”
Could this describe the grim determination to keep the grand European vision alive, no matter what?
Whether debasement takes the form of “coin-clipping” or printing counterfeit bonds with no tangible backing, the result is a very public theft of purchasing power – yours and mine. We haven’t felt its full impact because banks are hoarding the funny money to window-dress their balance sheets.
But when it trickles down to the High Street we’ll finally abandon the illusion that increasing the quantity of money creates prosperity.