Sentences to Ponder on the Eurozone
By Arnold Kling
1. From Tyler Cowen.
It probably is about time to judge the euro zone as a failed idea — and rarely is it wise to double down on failed ideas.
2. From David Zervos via John Mauldin’s newsletter (you may need a free subscription):
A bank run is the only way to get to equilibrium in this system.
John Cochrane says it makes no sense for Greece to stop using euros. Well, as long as somebody is willing to lend them euros, yes. But if no one is willing to lend them euros, and they have big budget deficits, and they are not allowed to print euros, then they have to start producing their own currency. The result of that, given their deficits, will be hyperinflation in their domestic currency. Eventually, that would produce a government that will balance its budget. And probably go back on the euro.
Anyway, both Tyler’s article and John Mauldin’s newsletter issue entitled “Meanwhile, Back at the Ranch” are worth reading in their entirety.