Almost twenty years after the launch of the euro on 1 January 1999, the situation of the single European currency is paradoxical. On the one hand, the failure of this project is obvious, being recognized by most competent economists, including many Nobel Prize winners. On the other hand, this subject is now taboo in France, to the point that no politician dares to tackle it head-on. How can this situation be explained?
No one links the current movement of “yellow vests” to the failure of the euro. However, the impoverishment of the greatest number, of which it is the most obvious sign, is a direct result of the policies implemented in an attempt to save the European single currency at all costs. This is not so much the quantitative easing monetary policy practised by the European Central Bank, which is not very effective, moreover, in boosting production, as it is the budgetary policies of raising taxes and cutting public investment, which are everywhere required by the Brussels Commission. These have, of course, ended up restoring the external accounts of some deficit countries. On the other hand, it was at the cost of “internal devaluation”, i.e. a drastic reduction in income, combined with a strangulation of domestic demand. They have thus led to a dramatic collapse of production in most southern European countries and a very high unemployment rate, despite a massive exodus of the living forces of these countries.
The euro zone is now the one with the lowest economic growth rate in the world. Far from being reduced, the differences between Member States have widened considerably. Instead of fostering the emergence of a European capital market, the “single currency” has been accompanied by an increase in the public and private debt of the majority of nations. However, the very existence of the euro, the effects of which could once still be discussed, has now become an absolutely taboo subject. While its link with the current discontent is obvious, supporters of the euro are promising the French its largely illusory advantages (except for the ease of travel in Europe). They paint an apocalyptic picture of the economic situation that would prevail if the “single currency” were to come out, in order to panic French people who have not studied the subject in depth.
Faced with such arguments, we must now show all that the euro has caused France to lose in terms of economic growth (collapse of its market share in Europe and the world, dramatic weakening of its industrial base). The French are already suffering setbacks in terms of purchasing power, employment, retirement, quality of public services, etc. The “internal devaluation” policies, which are essential if we want to keep the euro, have not yet been fully implemented in our country, unlike in other southern European countries, but they are already causing reactions of rejection. The movement of the “yellow vests” is a direct consequence of this.
We must therefore explain to our compatriots that the major disadvantage of the euro for France is an excessively high exchange rate which inevitably leads to a loss of competitiveness of our economy, by increasing French prices and labour costs vis-à-vis most foreign countries. Let us avoid confusing people’s minds with the idea of a possible coexistence between a restored franc and a “common currency No 2”, provided with all its attributes, because it is a dead-end path: such a currency could only be validly conceived as a simple “unit of account”, similar to the old ECU. As for the loss of sovereignty due to the euro, although it is undoubted, it is a theoretical subject, far from the concerns of the French, who are especially sensitive to their concrete situation.
For lack of understanding of the real issues, many of our compatriots thus retain, for the time being, an undisputed fear of any change in the status quo, while supporters of the euro shout at each time their fetish is called into question. What should we do under these conditions? In the face of the discontent of the French, it is obvious that no recovery policy for France will be possible if we do not succeed in recreating a national currency whose exchange rate is adapted to our country. But it is also certain that this change must be made under conditions that are both viable and accepted by the French people.
The first of these conditions would be to prepare for a smooth transition to a post-euro era, if possible by discussing with our partners the organisation of a concerted dismantling, but otherwise by taking the initiative unilaterally after having put in place the appropriate protective measures. The second would be to make our compatriots understand the advantages of a “monetary devaluation” of the regained franc, accompanied by a coherent economic policy, controlling inflation, as was the case in 1958 with General de Gaulle, then in 1969 with Georges Pompidou. And inflation would be even less to be feared today because of the under-utilisation of our production capacities. The inevitable loss of purchasing power, resulting from the rise in the price of certain imports, would only be modest and temporary, being very quickly compensated by the recovery of national production. Our country’s public debt would not increase because it would automatically be converted into francs (according to the so-called Lex monetae rule [this means that a sovereign state chooses which currency it will use, ed.] in international finance). France and the French would thus recover the brilliant prospects for the future that the euro has, until now, constantly stifled.•
(Translation: Current Concerns)
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