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Comment by philipallstar | Hacker News Reader

> there would no end of "EU is trampling national interests" and similar screaming

To just call this "screaming" is to completely dismiss a real and huge problem. The EU is the idea that countries should fuse into economic areas, but the countries are also individual still. Of course there's a lot of friction.

For example, because Greece was in the Euro, they couldn't inflate their currency to compensate for the fact that they gradually outsourced more and more work to Germany, until they had nothing left and hit a financial crisis because their government couldn't borrow more money. That's not mindless screaming.

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So you've described Greece as a bunch of scheming petulant children.

"Our plan to be inaccountable didn't work, so we'll try a different scheme instead".

And yes, it's a huge problem. That's why I called the situation unwinnable.

They could neither fix the problem with the policy tools a country with its own currency would have, nor did they have the automatic support from a central budget a region or state of a country would have.

Greece could have fixed their problems by cutting spending and collecting more taxes (not necessarily higher taxes, but actually collecting the taxes that were owed). Currency inflation was never necessary.

I think they did? At the cost of very slow recovery, which I think is the problem with austerity measures.

Austerity is not a "problem", it's simply the only remaining option when you run out of other people's money.

Countries can inflate their debt away at the cost of eroding savings and new borrowing becoming more expensive, no?

https://www.statbureau.org/en/greece/inflation-charts-yearly

Countries can't push that approach very far before new borrowing doesn't just become more expensive, it becomes effectively impossible.

Countries with poor credit struggle to issue debt in their own currency. Being able to inflate your debts away is a privilege of the rich.

This is a very strange perspective when the simplest solution is to introduce a demurrage euro for automatic equilibrium in the Eurozone.

I know you permanent money people are keen on a dog eat dog world where you trust no one and see everyone around you as a competitor to defeat.

They couldn't fix the problem because they were a corrupt country refusing to face their reality and which leadership decided to blame EU for not pumping more money into their pockets instead of fixing the structural problems of their rotting country.

Destroying their peoples lives with inflation so they could continue the parade would be even worse for both Greece and EU as a whole.

No, the Greeks were cool and calculating, turning an inflating fake fiat currency into hard assets like real estate, while not working or producing anything.

The introduction of the Euro was the start signal for each country to try to inflate as much as they can for their own benefit - since the first inflator gets the best value out of the currency. Idiots are left holding paper currency worth less and less each day. Having to work harder and harder in a never ending spiral.

The Euro had a much better set of inflation controls than most of the previous European currencies. Especially the lire.

Absolutely. But when you inflate your own currency, it is you who have to deal with the consequences. If you inflate everyone's currency you reap all the benefits and leave everybody else with the burden of the consequences.

But part of the setup was that inflation was controlled centrally by the ECB? How are you declaring that national governments inflated it?

Inflation isn't controlled by the ECB. Money is created when banks loan out money. Whether that be to people, companies, or governments (municipalities and so on). That's where all money comes from and how the currency is inflated.

The country which by legislation or by other means makes it easier for banks to lend out money will benefit their own citizens and companies, since they get to be the first spenders of newly created money before it reduces in value. That's how national governments can use inflation for their own benefit within a common currency system. But no government involvement is necessary. If a group of people (in this case the Greeks) are willing to take on extraordinary amounts of debts compared to other groups, then we have the same results.

Remember that all money which was borrowed in the European "debt crisis" went somewhere before the loans couldn't be paid. Somebody benefitted, and the idiots were left to pay.

> So you've described Greece as a bunch of scheming petulant children.

Can you quote where I did that, please?

Do you realize that your example actually counters your point? The Greece's example illustrates that a misbehaving minority shouldn't have an outsized influence on the majority, which is a correct thing to aim for, I completely agree with you on that. But the current EU arrangement actually allows minority entities to veto majority's initiatives and improvements, exactly because EU is not fully federated. 1 member country can screech and blackmail 26 other members for any arbitrary reason, and they all must comply with this minority's ultimatum. If EU was a federation, majority would simply outvote any obstructionists.

This is too simplistic. Most eu laws pass by simple or qualified majority.

Except in the Greece scenario, both Greece and Germany are to blame simultaneously as a whole package and not just Greece alone. The misbehaving minority that got bailed out are the German bankers.

If there were exchange rates between Germany and Greece, the problem would never had a chance to grow big enough to require a bailout.

And that's again follows my point - regular French or Poles or Spaniards have zero influence on the German financial system even if they together would be a majority by the numbers and had a same opinion. While German financial system can mess with them if they wish so.

Basically current EU has huge gaps of accountability in multiple directions and areas, even compared to a typical elected oligarchy of the singular developed country. Multiple EU institutions are not elected at all and neither they are accountable to the citizens across EU.

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