What this passage makes me wonder is: Has anyone ever written about European integration in the light of German unification in the late 19th century? The claim in the Reichsbank pamphlet that customs union was the easy first step, and that monetary union followed only later and with difficulty, certainly suggests some parallels. So does the suggestion that monetary union was the biggest economic benefit of political union. It would be interesting to ask, what were the concrete problems that monetary union was understood to be solving? And how did it fit into the larger political agenda of German unification?
Of course there are fundamental differences -- most importantly that German unification took place under the aegis of a sovereign political authority, whereas the central political-economic fact about Europe is that the monetary authority stands above the various national governments. But it still seems like the comparison could be illuminating.
The US faced a similar situation in the process of going from colonies, to a confederation, to a federation, which was then organized financially under the aegis of Alexander Hamilton as the first Secretary of the Treasury of the United States.
There were controversies during those times that are long forgotten by most other than scholars of the period. But had it not been for acceptance of Hamilton's plan for centralization, things might have gone differently, and in different periods the US operated sometimes under a central bank and at other times under free banking, at times under a gold standard and at times under a fait system. The US was even operated under a money-financed system at the time of the Civil War instead of the debt-financed system that Hamilton has established initially, even through there was no specific provision for a particular financial system and arguing for which Hamilton proposed the doctrine of implied powers that became accepted instead of enumerated powers based on
the necessary and proper clause.
So what the EZ is going through now is not uncharacteristic. But they seem to be having difficulty from learning from the past. The eurocrats need to get more creative before their experiment implodes with potentially dire results not only for Europe but the world.
The Slack Wire
