Opinion – Helio Beltrão: Euro reaches 20 years better for some than for others

20 years ago, euro banknotes began to circulate. It is the first postmodern currency, a meta-currency not backed by a tax base, a government, or an army. Pure abstraction.

The euro was the geopolitical power project of socialist Jacques Delors, who yearned to contain the economic power of reunified Germany as well as confront the supremacy of the US and the dollar.

In its early years, the advance provided by a common currency was remarkable. With the elimination of exchange costs and price transparency, trade between countries prospered. Peripheral countries benefited and enriched, as in the era of the gold standard, during which virtually the entire world used the same currency.

But like Mary Shelley’s Frankenstein monster, the euro was a somewhat nutty idea of ​​uniting vital organs and tissues (pesetas, shields, drachmas, florins, crowns and landmarks), some healthy, some less, into a sterile creature that won. life.

It was conveniently overlooked that some of these agencies had a history of multiple bankruptcies, civil wars, and runaway inflation. The naive belief was that, having a common money, completely different nations would converge in mentality. In other words, it was hoped that the Greeks would become responsible and savers like the Germans. Did not work.

At the end of its first decade of existence, the history of irresponsibility came to light. During the sovereign debt crisis (2009-2011), the governments of countries that made up the acronym Pigs (Portugal, Ireland, Greece and Spain) were unable to pay and refinance their debts or bail out their countries’ banks. The ECB (European Central Bank) ended up helping everyone with the creation of a mountain of new euros, through an artifice in which the rich countries, mainly Germany, guarantee the bad debtors.

This type of bailout, however, is more akin to fiscal and economic policy than monetary policy: that was not the mandate of the euro. But, to face the existential crisis, the motto of Mario Draghi, then president of the ECB, was supported: “Do whatever it takes”.

The creature survived.

A hidden agenda of Delors and his ideological descendants was that the euro would facilitate political integration in Europe (a central macrostate in Brussels) and the implementation of socialism through the back door: as in Thatcher’s pun, “socialism through the back Delors” .

The Fabian socialist Bernard Shaw said that “the government that promises to steal from Pedro to give to Paulo can always count on Paulo’s support.” A common currency with a central state makes possible the continuous expropriation of the Pedros by the Paulos, the socialists’ redistributive streak.

But the euro, at least until 2020, paradoxically proved to be an obstacle to Delors’ idea. Keynes said the gold standard “handcuffs the ministers of economy”; the euro has the same effect. Before, in financial crises, governments postponed reforms and generated inflation and currency devaluation. Now, the trick of devaluing to hide irresponsibility has been abolished. The only way out was to deal with investors and catch up on accounts. No wonder left and right populists want to bury the euro. They forget that if devaluing were good, Venezuela, Zimbabwe and Argentina would be rich, and Switzerland would be poor.

The Germans tried to ensure at the start that the euro had good monetary management, with the ECB focusing exclusively on price stability. Things have changed since then, and given current inflation and the ECB’s new targets to fight climate change and rescue irresponsible governments, frugal Germans may already regret this monetary experiment.