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Tragedy of the Euro

How young he is! Philipp Bagus has written an excellent and interesting history of the Euro, which you can buy on the Ludwig von Mises Institute website or download for free from the same site.

Read a summary of the interview on the GoldMoney site here. Here’s an excerpt:

In this video Philipp Bagus, Assistant professor of Economics at Madrid’s Universidad Rey Juan Carlos and author of The Tragedy of the Euro, and Alasdair Macleod of the GoldMoney Foundation talk about the eurozone facing the problem that is characterised in the “tragedy of the commons” analogy. Bagus explains this phenomenon by way of an example of overfished and over-exploited oceans due to a lack of property rights on oceans. In Europe, governments run larger deficits than their “competitors” in order to externalise the costs to all users of the currency. Knowing these incentives, the Stability and Growth Pact was put in place as per the early 1990s Maastricht Treaty, capping budget deficits at 3% of GDP and the debt to GDP level at 60%. However there was no enforcement of these rules which is why there have already been more than 80 infringements to this stability pact without any repercussions.

They talk about possible solutions to the euro crisis. Bagus points out that there are basically three different

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