The crisis in Europe and the Euro is not a surprise to students of economic history. Never in history has there been a sustainable single currency that crossed sovereign boarders. The Euro was intended as a big first step forward on the road to European economic and political union. The reality is that a unified currency cannot survive without political union. The vulnerability of the Euro as a single currency is the same as any fixed rate currency regime or a gold standard for that matter. If sovereign countries, as the term implies, have independent fiscal policies, labor policies, and overall economic policies then those more profligate countries will pressure a currency that they have no control over. This has happened throughout the monetary history. Indeed, it is why there are no fixed rate currencies regimes today, nor a gold standard. For all the insistence by gold bugs that a gold standard will prevent these sorts of crisis’s that occur from fiat money printing, it is precisely the pressures that printing money relieves that make fixed rate regimes unsustainable. Governments have an uncontrollable appetite for money and the theoretical discipline of fixed rate regimes is no match for politics.

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