Well, he’s right of course, but..

Unfortunately he is wrong: that is exactly what the prerequisite of real independence is. Without its own currency x would not be truly independent, most especially from the y. Let me just list the things over which it will have no control if it pursues monetary union.

X would not have an effective central bank, which many see as key to economic policy. You can’t have an effective central bank without your own currency.

As a result x would have no control over the amount of money circulating in its economy, and so will not be able to use that control to influence the economy, including its inflation rate, which will be entirely beyond its ability to address.

Nor will x be in control of its own government budget, so it would not be able to stimulate the economy by running a deficit, for instance. That is because the Government would be forced to balance its books unless it borrowed in a foreign currency, which would make it hard, if not impossible, to maintain parity with the pound.

And x would not control the interest rate at which its government and the rest of the economy borrowed money and would instead have those rates (and other conditions) imposed upon it.

In other words, for all practical purposes, the xish Government would have no effective control of any of the measures used to control its economy. In fact, it would be worse off than it is now. It would have, post independence without its own currency, about as much power over the economy of x as a local council has over that in its district, which as any councillor will tell you is minimal. It’s fair to say that such a xish Government would be in office but virtually powerless. It is very hard to understand why anyone wishing for independence would wish for that.

All quite correct. Tuber is talking about Scotland and the pound of course, but it does all apply to the euro as well. In fat, it’s a rather good description of why the euro is such a bad idea, isn’t it?

11 comments on “Well, he’s right of course, but..

  1. So he *can* understand things like this when it’s politically convenient for him to do so.

  2. Pat: ie, the Fourth Reich…

    abacab: yes, assuming a weak value for ‘understand’.

  3. @abacab

    What spud believes – like all lefties & EUers – is flexible as the only standard is being anti-right/Trump/UK/Brexit.

  4. Hang on, I thought that our noble captain has stated that tax exists to control inflation? Surely, at least in the short term, the country could use tax and spend to manage its economy? And isn’t the interest rate at which it borrows a function of its credit worthiness – ie it is linked to but still independent of the UK’s interest rate?

  5. Unless x runs a primary surplus and starts issuing mini-BoTs. But i agree, simpler and better not to be in monetary union in the first place.

    Why he thinks a goal of having a separate currency for x would be to have currency parity with y, rather than the goal being precisely not to, is anyone’s guess, as always.

  6. The fat fvck continues his steps towards becoming a member of our toytown government up here, probably has his piggy little eyes on Finance Secretary. FFS.

  7. @BF
    Doesn’t your system require government ministers to be elected MSP’s? Would any Jockster be stupid enough to elect a pretend half-Irish, barking mad, internet blogger?
    If so, England should declare war on you smartish. Before you do any more harm to yourselves or others.

  8. I also note that today he thinks a country that doesn’t issue its own currency “will not be able to use that control to influence the economy, including its inflation rate, which will be entirely beyond its ability to address.” I thought tax cured inflation in potatoland?

  9. @ napsjam
    Of course tax cures inflation in potatoland. If you confiscate all (or maybe 99% if you’re feeling generous) of private sector income then there won’t be enough cash slosding around to cause inflation.

  10. Diogenes beats us all to it.
    Yes, this is Murphy telling us today the very same thing he told us yesterday just isn’t true. Except he didn’t say it at all yesterday and you are a troll and candidly your time here is over. Until he tells us it all over again tomorrow… by which time he never denied it… candidly.

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