A plan is needed to stabilize the euro as the EU collapses.
A defeat for Italian Prime Minister Matteo Renzi in the referendum on December 4th could lead to early elections and a rise in support for the Five Star Movement, which has pledged to carry out a referendum on whether Italy should stay in the euro area.
But as the European Union and eurozone are set to break apart, there is a danger the euro itself could collapse.
“Jim Mellon, the Chairman of the Burnbrae Group, has warned the currency will become a victim in the growing anti-establishment surge which will cause the EU to fracture – all within five years.
He said: “Brexit is going to be a sideshow to the problems of Europe that are becoming more and more evident.
“The euro as it stands at the moment is just a very inappropriate mechanism — I give the euro between one and five years of life.”
So, we need a plan to stabilize the euro and stabilize inter governmental coordination through euro group style meetings throughout this brewing crisis.
The ECB is currently printing limitless money at 0% interest to try to keep the euro bloc governments afloat. amid unprecedented levels of debt
But the euro is already sliding in value on the foreign exchanges. If this slide continues, it could lead to a surge in inflation as imports become more expensive. The European Central Bank will then have to chose between allowing the euro to continue to slide and allowing ever higher inflation or hiking up interest rates. Yet economists think even a one per cent hike in interest rates would cause a deep recession in the eurozone given the gigantic amount of debt to be serviced. That means more businesses struggling to get by will go bankrupt and inflation will continue to rise in a downward debt death spiral of inflation and interest rate hikes.
The USA faces the same dilemma, but the inflationary pressures will likely be created by an ill judged trillion dollar infrastructure plan on the basis of private money floated by Wilbur Ross. As a result, the USA will go deeper into debt, have to borrow more from the private banks, pay more interest, raises taxes. The economy will continue to implode, taxes will have to increase to pay ever more interest to the banks in a downward spiral.
So the euro is set to collapse either through inflation or an interest rate increases unless a radical change is made.
Now is the time to work out a plan to switch the eurozone over from the private creation of money, the root of all this debt, to sovereign money.
As this blog has reported, the ECB is a public bank which, however, routes all the euro notes and coins, the legal tender in the eurozone to about 6000 private banks. That is to say, the euro, like the dollar, is a currency in the control of private banks. In the USA, the private banks actually own the Federal Reserve.
Through their monopoly on the money issuance, private banks can operate their fractional reserve banking system, printing money out of thin air and charging interest for loans that are just book keeping entries, as Vienna economics professor Franz Hoermann explained in an interview in Der Standard in 2010.
In addition, there is no legal basis for the de facto privatization of the euro just as their is no constitutional or legal basis for the privatization of the dollar. There is no article in any treaty allowing the euro to be in the hands of private banks as this blog has noted.
In June 2015, I actually wrote to the ECB to ask you which rule statue or legal provision allows the European Central Bank to direct euro notes and coins to private banks and not to the government directly?
As has been widely reported in the mainstream media, private banks have a de facto monopoly on the creation of money in the eurozone as in the USA and UK.
I asked where this was allowed in European Treaties and constitutions after I had not been able to find any clause making this lawful or constitutional.
The reply I got showed that there is only one little technical rule buried in a Treaty allowing this scam.
“The so-called prohibition of monetary financing is based on article 123 of the Treaty on the Functioning of the EU, see http://www.ecb.europa.eu/ecb/legal/pdf/c_32620121026en.pdf, which reads:
Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.”
A screenshot of the email reply from the ECB.