The euro disaster — Wynne Godley was spot on already back in 1992! — LARS P. SYLL

If there were an economic and monetary union, in which the power to act independently had actually been abolished, ‘co-ordinated’ reflation of the kind which is so urgently needed now could only be undertaken by a federal European government. Without such an institution, EMU would prevent effective action by individual countries and put nothing in […]

via The euro disaster — Wynne Godley was spot on already back in 1992! — LARS P. SYLL


2 thoughts on “The euro disaster — Wynne Godley was spot on already back in 1992! — LARS P. SYLL

  1. A truly remarkable article by Godley (thanks for the link to the link to the not very long original).

    At the time (1990s), my impression, from a German point of view and judging from the consumption mass media products, was of an indubitable consensus: the Euro was needed and it would be a significant improvement, from an economic point of view too. The populace was either compliant or instinctually apprehensive but without a voice (many Germans were worried about the loss of the Deutsche Mark).

    I do not recall a publicly effective resistance by professional economists – only after the event did I learn that several hundred German economists publicly opposed the introduction of the Euro.

    At the time, I was dealing closely with top-notch bankers, who treated the matter as God-given and mainly a technical issue (lets get the ATMs converted in time). My proposal to study the long-term effects and risks of the Euro was met with puzzled consternation and indifference.

    I am not aware of the stance taken by the left and institutions defending the interests of the working population; to the extent that they have been in favour of the Euro, what Godley’s article appears to confirm is that they are guilty of a breath-taking betrayal of the interests of their constituents.

    • Thanks for your comment. Interesting to hear about your experiences around the time when the euro was introduced. Godley was firmly in the post-Keynesian camp, but even taking that into account, something of a maverick. He produced models which predicted recessions in the UK on several occasions, as well as in the US. He tended to be pessimistic, perhaps overly so, arguing that recovery was impossible without fiscal/monetary expansion and/or devaluation, but that hardly detracts from his remarkable prescience.

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