Sunday 11 December 2016

Euro is too strong and should be devalued

Published 28/07/2011 | 05:00

The euro is in no danger whatever of "collapsing". On the contrary, its rate against other currencies is far too high -- it is too strong. It should be allowed to fall to $1.10 or so, given that its 'midwives' hoped only for dollar parity at its birth. How can Greece, Ireland, Italy, Portugal and Spain, all dependent on tourism, be expected to survive when Americans pay $1.44 for e1?

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The economist J K Galbraith remarked that "sound money means protection of its value for the benefit of those who hold it".

The people of the above 'PIGS' lands are suffering for precisely that, and for a policy that is as doomed to failure as Britain's 1925-31 struggle to remain on the gold standard, as foolish as the many other futile attempts to maintain unrealistic sterling exchange rates.

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