Monday, November 29, 2010

Comment on - Daniel Hannan -
The Corner - National Review Online:
Erin Go Bust: The Euro Did It.

Erin Go Bust: The Euro Did It. - By Daniel Hannan - The Corner - National Review Online

The EU was not set up to emulate America by establishing a "United States of Europe." That conceit was sold though to build support in Yankeeland. Because it was intended to break down local identities the EU avoided the mechanics of Federalism that the US had pioneered, even where they arguably might have worked and the trappings were at hand.

For example the US has 12 regional Federal Reserve banks that adjust the money supply based on the needs of their localities. If the EU had viewed their monetary system from that functional approach, rather than as part of a grand ideological project, then it might have worked.

Unfortunately the US has itself gotten away from its federalist roots in a drive to become more European. For example the immediate engines of the melt-down in 2008 were Fannie and Freddie. They served as a joint tool for the centralized control of the economy. Reforms should include breaking them up into 12 Federal Regional Mortgage Associations.

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