In his latest coup, blogger John Hawkins interviews Milton Friedman. The whole thing is a must read, but as we’re on the topic of the Euro, try this:
“John Hawkins: Europe has been moving towards a single currency. Do you think that’s a wise move for all the states, some of them, or none of them? Why so?
Milton Friedman: We’re in the midst of wonderful natural experiment. You have a really different arrangement with the Euro than we’ve ever had historically. We’ve had many cases in which a number of countries have used the same currency. That’s when they’ve used gold or silver as money. But each individual country has been able to control the content of its own money. So while they were using the same commodity as currency, they were always in a position to determine what the terms of exchange were between their own currency and the other currencies.
But the Euro is a very different arrangement. For the first time in history, we have essentially an independent central bank for a considerable number of distinct political entities. I, in advance, was very negative about it and have been very negative & pessimistic about it. We’ll see how the Europe plan does on the one hand and on the other, how the other countries of the world, the UK, the United States, Japan, which are linked together by flexible exchange rates, we’ll see how they do.
So we’ll have a really nice, natural experiment just as before the Soviet Union dissolved, we had a natural experiment comparing socialism and capitalism.”