EMU is Bad, Bad, Bad

By joining the euro, Greece and other peripheral nations lost much more than control over interest and exchange rates.

They also lost the capacity to issue debt in their own currencies.

Just as bad, they have lost the discretion to apply counter-cyclical budget policies.

The extreme mix of deflationary measures they have been forced into,  to regain competitiveness, means they may not even be able to use automatic fiscal stabilisers to fight economic contraction.

A self-feeding spiral of economic destruction has established itself.

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