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When will Ireland default?
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Europe has no system in place for dealing with crisis in a sustainable and co-ordinated fashion, and to get that, Europe has to take a massive lurch towards integrating into a single unified nation, by allowing some co-ordination of fiscal policy from within Europe.As I see it, there has been economic mismanagement in certain EU countries. At EU level, bases for sustainable macroeconomic policies are laid down in the Maastricht criteria. Most countries chose to ignore them. That's not the EU's fault.
The ECB has made money available at modest interest rates, and recently at low rates. It is not the fault of the ECB if certain countries abused borrowed money.
As for 'control', Ireland had practically complete control of its macroeconomic and financial policy during the C****c T***r years. And Ahern & Co. blew it completely.
Europe is still not equipped to deal with the next economic crisis (nevermind even this one) - there has been no adequate reform, that would stop a crisis just like this from happening all over again, and nobody has been held to account for this crisis either, to deter it from happening again.
A country without control over its own currency, loses a huge amount of control over fiscal policy whenever an economic crisis hits - I don't understand this habit people have, of judging economic issues only from the good times, when it is the bad times that truly defines the state of a countries economic control.0 -
When you adopt a single currency among countries as we have, without adequate protections against economic crisis, then every economic crisis encountered will grind down the weakest of the participating countries, and will allow the more politically powerful countries to block the weaker countries access to needed money - this goes on until the currency dissolves, or the countries agree to a central federal government that handles fiscal policy co-ordination (the third option is adequate regulations - but there is absolutely no appetite for this, from what I can see, and it is far too easily dismantled in the future, which would cause exactly the same problems as now).Even accounting for the concept of 'ever closer union', I don't see any basis whatsoever for a unified European nation. I don't know of a single country or region which would accept a new legal basis in the EU treaties to permit this. There are too many distinct cultures in Europe for there to be a basis for a single nation.
Regardless of the Euro, EZ countries are still mainly sovereign, and will remain largely so for the foreseeable future. Certain aspects of sovereignty will continue to be pooled on a formal legal basis. But member states will still remain nations, cultures or whatever makes them distinct.
Europe has no answer on how to deal with economic crisis in a sustainable way, that does not involve significant centralization, which moves Europe far closer to becoming a single unified nation.
If I thought Europe would be competent at this, I'd be for it since it would allow for an end to the economic crisis, but Europe are not competent and the single currency (due to lack of all the required centralized safeguards for times of crisis) has been a disaster, and it should probably at this stage be aborted, since there are no signs of real reform and recovery policies coming.
It's a pretty monumentally bad/painful time to end the Euro, but since no recovery policies seem to be on the way, it may well be less worse than sticking with it at this stage.
There is also no real meaningful sovereignty for a country, when it has no control over the currency it uses - it means every economic crisis causes a serious loss of control over fiscal policy, and thus over the countries whole politics (and ensures a huge amount of that control, is handed to the private financiers who own the government bonds/debt).0 -
Banking and financial regulation has yet to be agreed. As has a mechanism for requiring states to stick to the Maastricht criteria. Neither of these steps requires a massive lurch towards becoming a nation. And if they form an adequate basis for responsible macroeconomic policy and control of finance, the member states and the markets will be happy enough.KyussBishop wrote: »Europe has no system in place for dealing with crisis in a sustainable and co-ordinated fashion, and to get that, Europe has to take a massive lurch towards integrating into a single unified nation, by allowing some co-ordination of fiscal policy from within Europe.
Europe is still not equipped to deal with the next economic crisis (nevermind even this one) - there has been no adequate reform, that would stop a crisis just like this from happening all over again, and nobody has been held to account for this crisis either, to deter it from happening again.
As for the next economic crisis, which will surely come sometime, if EZ macroeconomics and debts are in good shape, and if finance is controlled, we'll be in better shape to respond.
As for this current crisis, it's up to electorates and elected leaders to make sure the same mistakes aren't made again. There's no guarantee, and for sure there will still be losers out there. But if more EZ countries are in better fiscal shape than before, that' a result.0 -
Under Ahern we had *plenty* of fiscal control. Yet we still managed to mess it up completely.KyussBishop wrote: »A country without control over its own currency, loses a huge amount of control over fiscal policy whenever an economic crisis hits - I don't understand this habit people have, of judging economic issues only from the good times, when it is the bad times that truly defines the state of a countries economic control.0 -
I'm sorry, but this is simply too makey uppy for words.KyussBishop wrote: »When you adopt a single currency among countries as we have, without adequate protections against economic crisis, then every economic crisis encountered will grind down the weakest of the participating countries, and will allow the more politically powerful countries to block the weaker countries access to needed money - this goes on until the currency dissolves, or the countries agree to a central federal government that handles fiscal policy co-ordination (the third option is adequate regulations - but there is absolutely no appetite for this, from what I can see, and it is far too easily dismantled in the future, which would cause exactly the same problems as now).0 -
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There can be no sustainable recovery until participating countries demonstrate their ability to reform their economies and state structures. Once there's an acceptable level of harmonisation, meaningful EZ level solutions can then be overlaid.KyussBishop wrote: »If I thought Europe would be competent at this, I'd be for it since it would allow for an end to the economic crisis, but Europe are not competent and the single currency (due to lack of all the required centralized safeguards for times of crisis) has been a disaster, and it should probably at this stage be aborted, since there are no signs of real reform and recovery policies coming.
It's a pretty monumentally bad/painful time to end the Euro, but since no recovery policies seem to be on the way, it may well be less worse than sticking with it at this stage.
As for recovery, that requires investment, and the funding required will not be agreed until structural reforms are achieved.
To my mind, there's a very clear sequence that needs to be adhered to before common solutions are agreed. We're close to the broad rectification of national problems. Once the German electorate has endorsed pro-EZ action, I think we'll move to the EU regulation level, closely followed by a period of investment-led growth. At that point the EZ part of the international crisis will be officially over. IMO.0 -
So much for the UK's sovereignty when Soros broke the Bank of England.KyussBishop wrote: »There is also no real meaningful sovereignty for a country, when it has no control over the currency it uses - it means every economic crisis causes a serious loss of control over fiscal policy, and thus over the countries whole politics (and ensures a huge amount of that control, is handed to the private financiers who own the government bonds/debt).
If, for our part, we returned to the Punt, I doubt our currency independence would count for much unless we had Norwegian amounts of oil or Swiss levels of discipline.0 -
Only until the next crisis. Upon which countries do not have adequate control over fiscal policy, to avoid being dragged down again.Banking and financial regulation has yet to be agreed. As has a mechanism for requiring states to stick to the Maastricht criteria. Neither of these steps requires a massive lurch towards becoming a nation. And if they form an adequate basis for responsible macroeconomic policy and control of finance, the member states and the markets will be happy enough.
As for the next economic crisis, which will surely come sometime, if EZ macroeconomics and debts are in good shape, and if finance is controlled, we'll be in better shape to respond.
As for this current crisis, it's up to electorates and elected leaders to make sure the same mistakes aren't made again. There's no guarantee, and for sure there will still be losers out there. But if more EZ countries are in better fiscal shape than before, that' a result.
The last 30 years of economics has been all about dismantling regulations - it would be naive to think this will not happen again, and the history of European economic reform for the last half-decade, has been in implementing the bare-minimum solutions required, to avoid disintegration.
We don't have any reforms, only the vague promise of reforms, which could just as easily not come about - there has been nowhere near enough reform that would allow us to deal with a future economic crisis.
European macroeconomics won't be in good shape in the next crisis, without some centralized fiscal policy control - use of debt, with a currency countries do not control, will not be sustainable.
The same mistakes will be made again, because the electorate only has a small pool of parties to pick from in most countries, and almost all of those parties tailor to the financial/business/wealthy elite in their respective countries, to a large extent - it's not a matter of 'if', only a matter of time, because of the total lack of adequate reform.
This isn't replying to what you quote at all - you are judging fiscal control, based on economic 'good times', when it is economic bad times which determine how much control you really have - we have fúck all control now.Under Ahern we had *plenty* of fiscal control. Yet we still managed to mess it up completely.
Countries are not demonstrating this ability, and that is what is setting us up for the precise same situation in the next economic crisis.There can be no sustainable recovery until participating countries demonstrate their ability to reform their economies and state structures. Once there's an acceptable level of harmonisation, meaningful EZ level solutions can then be overlaid.
As for recovery, that requires investment, and the funding required will not be agreed until structural reforms are achieved.
To my mind, there's a very clear sequence that needs to be adhered to before common solutions are agreed. We're close to the broad rectification of national problems. Once the German electorate has endorsed pro-EZ action, I think we'll move to the EU regulation level, closely followed by a period of investment-led growth. At that point the EZ part of the international crisis will be officially over. IMO.
It's been half a decade already, and there's still only the vague 'hope' of proper reform and recovery policies - half a decade, with another decade (and a half, maybe) to go - Europe has shown it will (collectively) only do the bare minimum required to avert disintegration.
This crisis will not be over until a massive stimulus-based recovery restores full employment throughout Europe (there is no 'end' to the crisis, until full-employment is achieved again - unless massive unemployment is not considered a 'crisis').
Straight away, the UK has far less interest on its national debt, because its central bank is able to guarantee the payment of that debt - something Ireland can not do, because of lack of control over our currency, and thus is hammered on the bond markets for.So much for the UK's sovereignty when Soros broke the Bank of England.
If, for our part, we returned to the Punt, I doubt our currency independence would count for much unless we had Norwegian amounts of oil or Swiss levels of discipline.
That's only one way of many, that monetary sovereignty is essential for sovereign control over fiscal policy in bad times, and thus for political independence itself.0 -
The last 30 years of Anglo-Saxon economics maybe. But at EU level, fiscal controls and budgetary responsibility were introduced in principle 20 years ago. Somebody's thinking ahead.KyussBishop wrote: »The last 30 years of economics has been all about dismantling regulations - it would be naive to think this will not happen again, and the history of European economic reform for the last half-decade, has been in implementing the bare-minimum solutions required, to avoid disintegration.
We don't have any reforms, only the vague promise of reforms, which could just as easily not come about - there has been nowhere near enough reform that would allow us to deal with a future economic crisis.
European macroeconomics won't be in good shape in the next crisis, without some centralized fiscal policy control - use of debt, with a currency countries do not control, will not be sustainable.
The same mistakes will be made again, because the electorate only has a small pool of parties to pick from in most countries, and almost all of those parties tailor to the financial/business/wealthy elite in their respective countries, to a large extent - it's not a matter of 'if', only a matter of time, because of the total lack of adequate reform.0 -
Look, if you can't exercise sovereign control during the "good" times, what makes you think things will be done better during downturns?KyussBishop wrote: »This isn't replying to what you quote at all - you are judging fiscal control, based on economic 'good times', when it is economic bad times which determine how much control you really have - we have fúck all control now.
You're completely and utterly avoiding the fact that Ireland had considerable scope for autonomous policy during the bubble years, but did not exercise it.0 -
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Many of the problems suffered in EZ countries have built up over decades, particularly Greece's non-society and Italy's massive public debt. And you expect ingrained problems to be solved in a fe years? Be reasonable.KyussBishop wrote: »It's been half a decade already, and there's still only the vague 'hope' of proper reform and recovery policies - half a decade, with another decade (and a half, maybe) to go - Europe has shown it will (collectively) only do the bare minimum required to avert disintegration.
This crisis will not be over until a massive stimulus-based recovery restores full employment throughout Europe (there is no 'end' to the crisis, until full-employment is achieved again - unless massive unemployment is not considered a 'crisis').
As for recovery, I expect there will be massive EU-wide investment launched within the next 12 to 18 months. This will transpire to be a more constructive and sustainable approach than Anglo-Saxon quantitative easing.0 -
That doesn't contradict anything I've said - I pointed out the widescale rolling back of regulations, you are talking about something completely different.The last 30 years of Anglo-Saxon economics maybe. But at EU level, fiscal controls and budgetary responsibility were introduced in principle 20 years ago. Somebody's thinking ahead.
I'm talking about lack of sovereign control, and when it comes to monetary/fiscal sovereignty, that most affects countries during economic bad times, meaning that is the time to judge how much control a country has.Look, if you can't exercise sovereign control during the "good" times, what makes you think things will be done better during downturns?
You're completely and utterly avoiding the fact that Ireland had considerable scope for autonomous policy during the bubble years, but did not exercise it.
You just seem to be labouring the point a bit here.
A few years? Half a decade. If it's not solved after that long, then how long will it be?Many of the problems suffered in EZ countries have built up over decades, particularly Greece's non-society and Italy's massive public debt. And you expect ingrained problems to be solved in a fe years? Be reasonable.
As for recovery, I expect there will be massive EU-wide investment launched within the next 12 to 18 months. This will transpire to be a more constructive and sustainable approach than Anglo-Saxon quantitative easing.
I hope we do get that investment launched, but to be honest, I'm very cynical about that and can easily see it being derailed or implemented in a deliberately stunted way (as most recovery policies have been thus far).0 -
Any level of debt can be presumed to be manageable if you predict enough growth to support it. So far, predicting a growth takeoff has proven easier for the government than that growth actually occurring.
I said several years ago that we should never ever ever want to see an Irish sovereign default. However, the Green Jersey brigade have made that increasingly difficult to avoid by happily converting as much bank and private debt into actual Irish sovereign bonds - even the "promissory note deal" was essentially a con trick that converted a legally dubious promissory note that could arguably be defaulted on with relatively minimal effects into straight-up Irish sovereign debt that realistically cant be defaulted on without all hell breaking loose.
That said, if you presume Ireland hasn't already defaulted ("Ireland Inc" and Irish companies have actually defaulted on debt - just on the little guy) then we will default when fiscal discipline becomes politically impossible. We can keep paying our bills to an essentially indefinite point - shut down schools, hospitals and prisons (and sell the prisoners to medical research programs, everyone wins), send the army round to loot Foxrock of all portable wealth etc. Whatever it takes to service the interest, until the politicians realize they cant sell whatever it takes anymore. That's when Ireland will default - it will be a matter of wont pay, not cant pay.0 -
There's a qualitative difference between the deregulation agenda led by the Anglo-Saxon economies, and the more prudent approach laid down in Maastricht. There's a world of a difference between the politicised Fed and the 'constitutionally' independent ECB.KyussBishop wrote: »That doesn't contradict anything I've said - I pointed out the widescale rolling back of regulations, you are talking about something completely different.
The EU/EZ is developing a way of doing business that differs significantly from the US and the UK.0 -
To the contrary. You can judge how competent a country's exercise of sovereign control is in the manner in which it manages during the good times, for instance by saving for a rainy day, or avoiding pro-cyclical policies. One of the stated aims of EZ economic policies is to avoid boom-bust cycles.KyussBishop wrote: »I'm talking about lack of sovereign control, and when it comes to monetary/fiscal sovereignty, that most affects countries during economic bad times, meaning that is the time to judge how much control a country has.
I'm afraid you're being a little selective in over-emphasising the importance of sovereignty in a down cycle. Probably because Ireland's demonstrable failures during the upswing, when we did have definite policy control don't suit your sovereignty narrative.0 -
Half a decade = 5 years. A few = 3 or 4. What's the big deal? There's no major difference.KyussBishop wrote: »A few years? Half a decade. If it's not solved after that long, then how long will it be?
I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.0 -
What in your opinion would constitute this corrective action? Fair play to you for putting your cards on the table, but I think you are being a bit optimistic here.I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.0 -
Again that's not contradicting anything I've said (much of it doesn't even relate to anything I've said); the European regulatory system obviously wasn't near good enough, and it's far short of the necessary reforms (and looks like it will be for some time still).There's a qualitative difference between the deregulation agenda led by the Anglo-Saxon economies, and the more prudent approach laid down in Maastricht. There's a world of a difference between the politicised Fed and the 'constitutionally' independent ECB.
The EU/EZ is developing a way of doing business that differs significantly from the US and the UK.
That's not even considering deterrence: Hardly anyone has gone to jail, fraud has not been investigated (hell, here in Ireland whistleblowers wanting to expose fraud have been threatened with prison if they do report it), and there is zero appetite for pursuing this.
All the fraudsters who caused the crisis are de-facto above the law, and very little is being done to reign them in, with no sign of change in Europe - when are we going to see a proper investigation and arrests for all of this, throughout Europe? We won't, because it will destabilize the banking system further, and that would require real reforms and recovery policies to fix.
You're just point-scoring now. We're talking about control, not 'competence'.To the contrary. You can judge how competent a country's exercise of sovereign control is in the manner in which it manages during the good times, for instance by saving for a rainy day, or avoiding pro-cyclical policies. One of the stated aims of EZ economic policies is to avoid boom-bust cycles.
I'm afraid you're being a little selective in over-emphasising the importance of sovereignty in a down cycle. Probably because Ireland's demonstrable failures during the upswing, when we did have definite policy control don't suit your sovereignty narrative.
We have far less control over fiscal policy when the limits of our fiscal policy is dictated by our inability to seek lower-interest debt (and other funding methods), which are not available to us because we don't have sovereign control over our currency.
That fact is 100% unavoidable. If we had our own currency, we would not be paying such high interest rates on debt, because a country with sovereign control over its currency can always guarantee the debt - we can't, because we don't have that control.
What we could have done in the good times, does not affect what we can not do now - we have lost that control now, during the bad times, when it counts the most.
Seriously, you're just labouring the point again to try and pretend like you have a counterargument.
5 years and counting, and where is this recovery? We believe it's still 'just around the corner', like has constantly been implied the last number of years? I don't think so.Half a decade = 5 years. A few = 3 or 4. What's the big deal? There's no major difference.
I've explicitly stated that I expect the EU/EZ to take substantial corrective action within 12 to 18 months. I think the European body politic is capable of holding out until then.
I really hope I am proven wrong about that, but the last 5 years of Europe taking the bare-minimum action necessary to avoid a collapse, and not nearly enough to engage in proper reform/recovery, speak heavily against that.0 -
KyussBishop wrote: »We have far less control over fiscal policy when the limits of our fiscal policy is dictated by our inability to seek lower-interest debt (and other funding methods), which are not available to us because we don't have sovereign control over our currency.
We remain perfectly free to seek lower interest debt. Our ability to obtain it depends on our ability to manage our finances though.KyussBishop wrote: »That fact is 100% unavoidable. If we had our own currency, we would not be paying such high interest rates on debt, because a country with sovereign control over its currency can always guarantee the debt - we can't, because we don't have that control.
This claim is at variance with our experience when we had the Punt. We paid higher interest rates then and only dreamed we'd ever pay the low rates we are currently paying.
Also, some EZ member states are paying lower interest rates on their borrowings than the UK for instance. We in turn are paying lower interest than Poland for instance (although higher than the UK). According to your idea both Poland and the UK should be paying lower interest than all the EZ member states, yet that clearly isn't the case.0 -
Where should one put fhere money.0
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KyussBishop wrote: »Do we really want this anymore - for Europe to turn into a single unified nation?
I do, I've been voting that way for 30 years now.0 -
In other words, we're perfectly free to seek it, just not get it (where it would be more manageable with our own currency, since we could guarantee it gets paid back, reducing the bond yield) - yes, being free to seek but not get, that does us a lot of good.We remain perfectly free to seek lower interest debt. Our ability to obtain it depends on our ability to manage our finances though.
The interest rate is an adjustable policy choice, it is not locked - combine that with the ability to fund through money creation (limited by hitting inflation targets), and you can set it at whatever interest rate you like (you can even discard with the use of government bonds altogether).This claim is at variance with our experience when we had the Punt. We paid higher interest rates then and only dreamed we'd ever pay the low rates we are currently paying.
Also, some EZ member states are paying lower interest rates on their borrowings than the UK for instance. We in turn are paying lower interest than Poland for instance (although higher than the UK). According to your idea both Poland and the UK should be paying lower interest than all the EZ member states, yet that clearly isn't the case.0 -
KyussBishop wrote: »In other words, we're perfectly free to seek it, just not get it (where it would be more manageable with our own currency, since we could guarantee it gets paid back, reducing the bond yield) - yes, being free to seek but not get, that does us a lot of good.
Welcome to reality. Nobody is under any obligation to buy our bonds. They may choose to do so but will only do that if they are rewarded with an interest rate that is high enough.
As it is, if memory serves me correctly when we used the Punt, we were issuing something like 3/4s of our government debt in Sterling or D-Marks. How exactly could we "guarantee" to pay such debt back when neither of them were our currency?KyussBishop wrote: »The interest rate is an adjustable policy choice, it is not locked - combine that with the ability to fund through money creation (limited by hitting inflation targets), and you can set it at whatever interest rate you like (you can even discard with the use of government bonds altogether).
You are ignoring the reality that we paid higher interest rates when we had the Punt.
Are you seriously suggesting we had the option to set it lower but were - for some mysterious reason - volunteering to pay higher interest rates for our debt than we wanted to?
Reality does NOT conform to your theories and although you may choose to ignore it, others will not. If you tell a prospective bond holder you'll repay him via "money creation", he'll loan his money to another government instead as he wants a real return on his money.0 -
KyussBishop wrote: »In other words, we're perfectly free to seek it, just not get it (where it would be more manageable with our own currency, since we could guarantee it gets paid back, reducing the bond yield) - yes, being free to seek but not get, that does us a lot of good.
If this is true then why were bond yields running as high as 19% in the early 80s? We had control of our currency & interest rates, so why couldn't we get lower bond yields?
The answer is simple, because we do not (and never did) really control any of those items with the degree of control you seem to think is possible. No economy does, except perhaps communist ones.0 -
As it is, the lack of any guarantee we will pay it back, increases our yield even more - the interest rate is a policy option, and even then there is easily the capability of funding up to inflation targets (i.e. up to full economic-output/employment), through money creation where needed.Welcome to reality. Nobody is under any obligation to buy our bonds. They may choose to do so but will only do that if they are rewarded with an interest rate that is high enough.
As it is, if memory serves me correctly when we used the Punt, we were issuing something like 3/4s of our government debt in Sterling or D-Marks. How exactly could we "guarantee" to pay such debt back when neither of them were our currency?
Yes of course we did, countries with sovereign control over their currency don't even need to use debt - they are perfectly capable of sourcing funding through money creation - something economic theory for the last 80+ years has gotten wrong, mind, hence the use of ridiculous interest rates on bonds, which enrich financial institutions.You are ignoring the reality that we paid higher interest rates when we had the Punt.
Are you seriously suggesting we had the option to set it lower but were - for some mysterious reason - volunteering to pay higher interest rates for our debt than we wanted to?
Reality does NOT conform to your theories and although you may choose to ignore it, others will not. If you tell a prospective bond holder you'll repay him via "money creation", he'll loan his money to another government instead as he wants a real return on his money.
A bondholder, holding Punt's with nowhere to put it, will take what he is given in terms of interest. Especially when public creation of money, already satiates most private demand for that money through it being spent into the economy.
There is no 'theory' here, as 'endogenous money' (the fact that banks already create money just by extending loans), upon which simple (mathematically true) accounting rules are built upon (tracing all flows of money from the central bank through the economy) to construct a description of the macro-economy, is fact not theory.0 -
Do you seriously think that Ireland as an entity has been better managed than the EU as a whole?KyussBishop wrote: »Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)0 -
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To answer the OP, never.
If we weren't going to default in 2008/9/10, we're not doing it now the deficit is under control.
Where are all the posters on here who were predicting default and the end of the Euro. Why are there economic "commentators" who still have newspaper columns after bringing terror to gullible parts of the population a few years ago? Much the same as the property crash, the Internet is going to retain everything.0 -
hmmm is somewhat right - we will never default because the ECB and the rest of the Troika will essentially always blink first when it looks like we cant meet the terms. They have vastly more to lose than we do from a messy default in the Euro, and they know it.0
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KyussBishop wrote: »As it is, the lack of any guarantee we will pay it back, increases our yield even more - the interest rate is a policy option, and even then there is easily the capability of funding up to inflation targets (i.e. up to full economic-output/employment), through money creation where needed.
Nonsense. As I already pointed out some EZ member states have lower interest rates in their borrowings than non-EZ states who are free to issue this "guarantee". Clearly the markets disregard the idea.KyussBishop wrote: »Yes of course we did, countries with sovereign control over their currency don't even need to use debt - they are perfectly capable of sourcing funding through money creation - something economic theory for the last 80+ years has gotten wrong, mind, hence the use of ridiculous interest rates on bonds, which enrich financial institutions.
Clearly countries with their own currencies don't believe this idea as they don't use it. This might be because they just don't believe your theory that economists don't understand economics.KyussBishop wrote: »A bondholder, holding Punt's with nowhere to put it, will take what he is given in terms of interest.
Prospective bond holders won't buy bonds in Punts if they don't get the return they want. Why should they if they get more from another country that follows "standard" economics rather than "alternative" economics?KyussBishop wrote: »There is no 'theory' here, as 'endogenous money' (the fact that banks already create money just by extending loans), upon which simple (mathematically true) accounting rules are built upon (tracing all flows of money from the central bank through the economy) to construct a description of the macro-economy, is fact not theory.
A theory is an explanation for a set of facts - hence your idea is a theory not a fact. You are entering the domain of religious faith if you are claiming it is a fact.
That though leads us to the obvious point though that economists looking at that underlying data prefer another theory to account for it.
Hence they and the governments and banks they work for act they way they do. That is not going to change if we wake up in the morning using the Punt again. Nor are the electorate either in Ireland or elsewhere in the EU going to rush to change that situation - competing economic theories aren't voters most pressing issues.0
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