Austrian economics responsible for Euroland disaster

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The founder of the Austrian economics, Carl Menger, inspired the Euro and its extremely flawed design. Menger's theory of money is proven to be wrong and the State Theory of Money is correct and we see the disasters all over the euro land proving that fact.

If you could explain source of this, i.e. what book/publication does Menger propose a Euro-like currency?

From what I know, most Austrians oppose the Euro and even government issued currency.

Ergo, I do not get what you are saying.

"Gold is the money of the advanced nations in the modern age."

Here page 26, (7 on pdf)

Ah, the anti-Keynes. And the Washington Consensus of the 1990's reconstitutes itself in the 2010's.

To be quite honest, idiots are the cause of the Euro problems. The currency union is fine, except for that they added s**tholes like Greece to the mix. Think about it like this, you have a hard-working, responsible and financially conservative person who thinks "I'd better save for a rainy day" and thus puts away 50% of the salary that enters the account every month (Germany). Then you have a person who spends money like a drunken bi-polar sailor in the middle of a cocaine binge (Greece) with no regard for the future what so ever.

What will happen when the second person gets to borrow money like if he was the first person?

The Euro would have been fine if it was based on a joint fiscal policy, free flow of labor and exports/imports and so on. However, when you added places like Italy, Spain and Greece to the mix, it had to be trouble since the people of the 3 countries have shown time and time again that they are completely and utterly unwilling to vote for representatives that favor a responsible fiscal policy.

If every Euro country was a responsible, mature and hard-working people like Germans, then it would be fine.

What's been done in terms of Keynesian policy is that they loved the spending bit, but hated the paying bit. It's kind of how some republicans view Obamacare, they are fine with the services offered, but hate the things that pay for them.

KEYNES IST TOT!

Even though I'm not a fan of Austrian economics, I think that it is silly to pin something with as many factors as the Eurozone crisis onto a single philosophy.

This is kind of xenon13's posting style. I mean, there's definitely a lot one can say negatively on the matter of Austrian economics, especially the ideas associated with the Mises Institute and all, but... Austrian economics isn't really that influential in Europe but rather much much more influential in the US, and the implementation issues are going to be the matter of European politicians, not even just expert economists.

And yeah, just as a final issue, most Austrian economists are in favor of a market driven money-supply. They either favor a gold standard directly, or they favor a free-banking system, but they don't favor an EU-style system.

Menger's theory of money is that money was invented spontaneously and such had an intrinsic value caused by scarcity. It was done to prevent people from losing wealth through multiple barters to get what was desired. The one currency idea was based partly on that through the fact that trading currencies was supposedly, according to Menger's musings about multiple barters, a wealth-losing proposition, and that currency had to have intrinsic value caused by scarcity. It had to be a completely private money free of any state, as Menger's money is according to his theory. It's a de facto gold standard but even more efficient because gold scarcity can be disrupted by a major gold find but the euro can be kept scarce forever. The State Theory of Money says that currency gets value through the fact that citizens or subjects of a state must be taxed in that currency and states are not constrained in issuing money and that too much scarcity is in fact undesireable. The scarcity of the money cannot be such that people cannot discharge their debts. The euro is so scarce that people cannot discharge their debts. It's not a real currency, it's Mengerian funny money.

The euro is a private currency, it is more Austrian than the gold standard itself. The architects of the euro were very explicit about their desire to cut the State out of the affair and to use the euro to limit what it can do, to shut down democracy as much as possible.

austrian economics wasn't responsible for the euro crisis.

not to say it is a sane or correct theory either.

Trading currencies IS a costly proposition in ALL economic theories, as they all involve transaction costs. So, talking about how it's bad from an Austrian perspective is kind of silly.

Additionally, Menger's theory of money involves a money that evolves UP FROM individual transactions. The Euro, the product of a European Union, a transnational governing body, doesn't actually count. Even the ECB would not really count as "private" for the purposes you're talking about.

xenon13, this isn't an intellectual position, or a real critique. Recognizing that doesn't require an expert knowledge on Austrian economics or anything even close to that. This idea is a joke at best. Y'know, especially since Austrian economics effectively DIED on the European continent during WW2, so most economists of this persuasion are US economists and not even the most influential group of US economists.

It seems to me that the people who drew up the Euro were highly influenced by Austrian quackery and that this "money exists to be hoarded only" mindset is destroying things over in Euroland. To refuse to see the Austrian fingerprints all over the debacle is to be a true believer, I suppose. The whole "inflation is theft" and "what is needed is a cleansing depression" mentality over there again is so Austrian...

It doesn't seem directly Austrian, but it does seem to have been influenced by the broader hyper-concerns and panicking over inflation that many conservative economists, Austrian or New Classical Macro, seem to share.

It is Mengerian and Menger is considered as the Founder of Austrian economics. Some information about the euro

You would think the US crisis had something to do with it.