This came up in conversation between my mom and I talking about Euros and how cool that is to me (Canadian). I then wondered why we can’t just have that everywhere and all she could say was “it wouldn’t work, what about less profitable countries” and I said “they’d just make/have less?” She did not like that answer and I really wanna know the real reason on why that wouldn’t work bc in my mind since we made up money why can’t we just make up how new money works???
Please explain like a teacher explaining why a kid can’t share 3 m&ms with 28 people
In: Economics
The eurozone is better for the wealthier countries of Europe than it is for the poorer countries in Europe. Much of southern Europe essentially has overvalued currency relative to their economy, while Germany in essance has an undervalued currency relative to what the deutschemark would be on its own. In an export based economy it’s advantageous to have a weaker currency, in an import based economy it’s advantageous to have a strong currency. This is why China devalues it’s currency, it’s economy and political stability depend on maximizing employment and exports. Germany has a disproportionately large industrial sector relative to other western economies and it’s very much bolstered by the euro. If poorer countries in southern europe had direct control over their monetary policy they’d likely be better positioned to compete in global markets for exported goods.
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