The Euro: An Approaching Crisis for the U.S.?

	The Euro, EU, and the Threat to Economic and Political Sovereignty: An Approaching Crisis for U.S.? The Conservative Caucus 450 Maple Avenue East * Vienna, Va. 22180 * 703-938-9626

Excerpted from Howard Phillips Issues and Strategy Bulletin of September 30, 2003

WILL USA SURRENDER NATIONAL INDEPENDENCE IN THE NAME OF FREE TRADE?

"In most EU countries more than half of new laws are already drafted in Brussels and then simply translated into national law. … The single biggest torrent of European legislation was unleashed by the formation of a single market which was agreed upon in 1985. …

"The EU’s writ runs well beyond internal-market regulations. The biggest areas for new legislation at the moment are the environment, public health, consumer protection and internal security. For all the talk of ‘subsidiarity’ – making law and policy at the most local level possible – the urge to Europeanise is still very powerful in Brussels. Both the commission and the European Parliament have an institutional interest in expanding their powers (‘competences’, in Euro-speak). The system of giving each country six months to set the EU’s policy agenda also encourages headline-grabbing initiatives. Nick Clegg, a Liberal Democratic MEP, argues that, though the flow of new laws has slowed, ‘The political momentum towards a relentless expansion of the acquis [EU law and competences] is constant.’ …

"The rule of thumb is that an EU role is demanded wherever a faintly plausible case can be made that an issue needs to be dealt with ‘on a cross-border basis’. But even this rule can be ditched, particularly if a piece of legislation can be sold as socially progressive. The working hours of professionals like doctors in one EU country have few implications for the citizens of another, but they are regulated in Brussels in the name of ‘the European social model’. On occasion this desire to promote an EU vision of society leads to a higher level of policy integration than is achieved in the United States. For example, the death penalty is banned across the EU but in America it is for individual states to decide whether to keep it or not." Source: The Economist, 5/10/03, p. 46

Excerpted from Howard Phillips Issues and Strategy Bulletin of January 15, 1999

EURO — PUSHED BY AMERICA'S "BIPARTISAN" POLITICAL LEADERSHIP WILL UNDERMINE U.S. ECONOMY

According to The New York Times (1/4/99, p. A6), "A euro representing the might of nations whose economies together already rival that of the United States in size could eventually draw away some of the influence and financial power that America has long maintained by virtue of having the world's dominant currency."

GLOBALISTS HAVE CREATED A CENTRAL BANK FOR EUROPE MODELED ON FEDERAL RESERVE

"David Hale, an economist at Zurich Kemper Investments in Chicago, compares the introduction of the euro to the formation more than eight decades ago of the Federal Reserve system in the United States. Before it had a central bank, the United States had no uniform monetary policy. Although it had a share of world trade nearly equivalent to Britain's, America accounted for a minuscule share of global finance."

THE DOLLAR WILL DROP AND U.S. HEGEMONY WILL BE REDUCED

"The dollar now accounts for nearly 60 percent of global foreign currency reserves, almost four times as much as the European currencies combined. And although it is difficult to predict how fast that situation will change, a successful euro would certainly reduce the dollar's hegemony in international finance over the long run. That could make it more expensive for the United States Government to borrow in an increasingly global capital market.

"‘Until now the fragmentation of Europe and the national nature of the central banks has inhibited the international use of the currencies,’ Mr. Hale said. ‘But at some point there will be a moment when international capital demand and additional competition for global savings hurt the ability of the United States to fund its external deficits because there will be competition to the dollar.’"

"DOLLAR DEFLATION"? AS GREENBACKS COME HOME TO ROOST

"There is also some question whether the United States will continue to benefit from the desire of people in other countries to hold dollars — a practice that amounts to a huge interest-free loan to the United States.

"By some estimates, a majority of dollars in circulation are outside the United States, held by everyone from Russians desperate to avoid the effects of a ruble depreciation to drug smugglers and arms merchants who need a currency they can move around the world with ease."

SURRENDER OF NATIONAL CURRENCIES CONCENTRATES POWER IN EUROPEAN CENTRAL BANK

The Washington Post (1/5/99, p. A10) editorializes that each "nation in ‘Euroland’ also has ceded a huge chunk of sovereignty, with consequences for their economies and democratic institutions that are today impossible to predict...."

A BIG STEP TOWARD CENTRALIZED CONTROL OF FINANCIAL TRANSACTIONS

"Money is a key component of economic policymaking. If unemployment rises, a central bank can lower interest rates, accepting some inflation or devaluation to spark economic growth. The 11 nations of Euroland now have forsworn [sic] that option.

"The Frankfurt-based European Central Bank will chart monetary policy for all of them, and the same policy for each...Massachusetts and Virginia are now similarly subject to the monetary policy of a single Federal Reserve system. But unlike in Euroland, the central government here also controls fiscal policy, and so can direct tax revenues from prosperous to troubled regions...."

"SHUT UP! THEY KNOW WHAT'S BEST FOR YOU"

"[T]he loss of sovereign decision-making is seen as a plus, since governments denied the seductive option of inflationary money printing will be pushed into more painful, but ultimately more healthy, structural reforms...."

INSULATION FROM POLITICS = INSULATION FROM ACCOUNTABILITY

"[A]s with all supranational schemes, from world government to an international war crimes court, there is an anti-democratic strand in this European Central Bank. Voters in each of the 11 democracies now are far less able to influence economic actions critical to their well-being. In Euroland today, that is seen as a plus — an ‘insulation’ from politics. In time — especially in hard times — it may be seen as a failing."

[_private/navbar.htm]