The Euro: How a Common Currency Threatens the Future of Europe

W. W. Norton & Company
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The Nobel Prize–winning economist and best-selling author explains why saving Europe may mean abandoning the euro. When Nobel Prize–winning economist Joseph E. Stiglitz posed this question in the original edition of The Euro, he lent much-needed clarity to a global debate that continues to this day. The euro was supposed to unify Europe and promote prosperity; in fact, it has done just the opposite. To save the European project, the euro may have to be abandoned. Since 2010, many of the 19 countries of Europe that share the euro currency—the eurozone—have been rocked by debt crises and mired in lasting stagnation, and the divergence between stronger and weaker economies has accelerated. In The Euro, Joseph E. Stiglitz explains precisely why the eurozone has performed so poorly, so different from the expectations at its launch: at the core of the failure is the structure of the eurozone itself, the rules by which it is governed. Stiglitz reveals three potential paths forward: drastic structural reforms, not of the individual countries, but of the eurozone; a well-managed dissolution of the euro; or a bold new system dubbed the “flexible euro.” With trenchant analysis—and brand new material on Brexit—The Euro is urgent and timely reading.
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An incisive look at the global economic crisis, our flawed response, and the implications for the world’s future prosperity. The Great Recession, as it has come to be called, has impacted more people worldwide than any crisis since the Great Depression. Flawed government policy and unscrupulous personal and corporate behavior in the United States created the current financial meltdown, which was exported across the globe with devastating consequences. The crisis has sparked an essential debate about America’s economic missteps, the soundness of this country’s economy, and even the appropriate shape of a capitalist system.

Few are more qualified to comment during this turbulent time than Joseph E. Stiglitz. Winner of the 2001 Nobel Prize in Economics, Stiglitz is “an insanely great economist, in ways you can’t really appreciate unless you’re deep into the field” (Paul Krugman, New York Times). In Freefall, Stiglitz traces the origins of the Great Recession, eschewing easy answers and demolishing the contention that America needs more billion-dollar bailouts and free passes to those “too big to fail,” while also outlining the alternatives and revealing that even now there are choices ahead that can make a difference. The system is broken, and we can only fix it by examining the underlying theories that have led us into this new “bubble capitalism.”

Ranging across a host of topics that bear on the crisis, Stiglitz argues convincingly for a restoration of the balance between government and markets. America as a nation faces huge challenges—in health care, energy, the environment, education, and manufacturing—and Stiglitz penetratingly addresses each in light of the newly emerging global economic order. An ongoing war of ideas over the most effective type of capitalist system, as well as a rebalancing of global economic power, is shaping that order. The battle may finally give the lie to theories of a “rational” market or to the view that America’s global economic dominance is inevitable and unassailable.

For anyone watching with indignation while a reckless Wall Street destroyed homes, educations, and jobs; while the government took half-steps hoping for a “just-enough” recovery; and while bankers fell all over themselves claiming not to have seen what was coming, then sought government bailouts while resisting regulation that would make future crises less likely, Freefall offers a clear accounting of why so many Americans feel disillusioned today and how we can realize a prosperous economy and a moral society for the future.
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Additional Information

Publisher
W. W. Norton & Company
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Published on
Aug 16, 2016
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Pages
304
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ISBN
9780393254037
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Language
English
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Genres
Business & Economics / Money & Monetary Policy
Political Science / International Relations / General
Political Science / Public Policy / Economic Policy
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Content Protection
This content is DRM protected.
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In 1971, President Nixon imposed national price controls and took the United States off the gold standard, an extreme measure intended to end an ongoing currency war that had destroyed faith in the U.S. dollar. Today we are engaged in a new currency war, and this time the consequences will be far worse than those that confronted Nixon.

 

Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.

Currency wars have happened before-twice in the last century alone-and they always end badly. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed. And the next crash is overdue. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing conflict.

As James Rickards argues in Currency Wars, this is more than just a concern for economists and investors. The United States is facing serious threats to its national security, from clandestine gold purchases by China to the hidden agendas of sovereign wealth funds. Greater than any single threat is the very real danger of the collapse of the dollar itself.

Baffling to many observers is the rank failure of economists to foresee or prevent the economic catastrophes of recent years. Not only have their theories failed to prevent calamity, they are making the currency wars worse. The U. S. Federal Reserve has engaged in the greatest gamble in the history of finance, a sustained effort to stimulate the economy by printing money on a trillion-dollar scale. Its solutions present hidden new dangers while resolving none of the current dilemmas.

While the outcome of the new currency war is not yet certain, some version of the worst-case scenario is almost inevitable if U.S. and world economic leaders fail to learn from the mistakes of their predecessors. Rickards untangles the web of failed paradigms, wishful thinking, and arrogance driving current public policy and points the way toward a more informed and effective course of action.




From the Hardcover edition.
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