devaluation of the euro

  sunnystaines 09:19 10 Nov 2011
Locked

cannot understand why they have not mentioned this option, surley it would help eire, portugal, spain & italy get back on their feet [greece is just a lost cause]

in fact i think it would help all the eurozone lot.

will boost exports and ease the debt.

  sunnystaines 10:02 10 Nov 2011

FM

thanks was no aware of that, I suppose the ECB cannot over ride that.

  johndrew 14:11 10 Nov 2011

I think the only way of actually devaluing the Euro is to print more. However, Germany dislikes that option as a result of its history.

If more Euro notes were put into circulation it may well help the current situation in the very short term. They would need to be withdrawn as the economic strength of those countries currently affected improved and this may cause another problem. Additionally if the economic situation declined even with the release of a greater volume of currency then inflation could escalate rapidly - Germany's fear.

  john bunyan 17:47 10 Nov 2011

johndrew. I have quite a few Euros in Holland where I worked until about 10 years ago, which have risen against the £ in the last few years. Do I bring them back now? The £ has fallen badly as we have printed money- used to get 2 -2.5 Australian or US $ or 1.4 Euros.

  Pineman100 18:36 10 Nov 2011

johndrew - "inflation could escalate rapidly - Germany's fear."

Dead right. Germany has a deep-seated horror of inflation, because of their history of hyperinflation in the early 1920s - caused by the Government's unfettered printing of money.

In 1923 particularly, inflation raged at a staggering pace - prices of commodities sometimes doubling within one day. People were paid several times a day and rushed out to buy basics before the price increased again.

When my father returned from WWII, he brought back several German banknotes dating from 1923. They had all been overprinted several times with higher and higher values. The last overprint on one of them was "10 billion Deutchmarks" and was - my father told me - insufficient to buy a loaf of bread.

Nowadays, of course, we don't print money. We undertake "Quantitative Easing". What's the difference?

That's a very good, and rather important, question.

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