“The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices… losses in output and employment (and pressure on the European central bank to inflate) will predominate.”

Euro fantasies, 1996

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Rudiger Dornbusch10

German economist 1942–2002

Robert Lucas Jr. (1937) American economist

"After Keynesian macroeconomics" 1978

“What was critical for the maintenance of pegged exchange rates, I argue in this book, was protection for governments from pressure to trade exchange rate stability for other goals.”

Barry Eichengreen Introduction

Source: Globalizing Capital (2008), Chapter 1. Introduction

“The central idea is that government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and withdrawal of money, shall be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine what is sound and what is unsound …Government should adjust its rates of expenditure and taxation such that total spending is neither more or less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is deficit, greater borrowing, "printing money," etc., then these things in themselves are neither good or bad, they are simply the means to the desired ends of full employment and price stability.”

Abba Lerner (1903–1982) American economist

On Functional Finance: (1943, pg.354) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=174849

“Basel has several first-rate restaurants, and it may be that in the view of the central-bank delegates this advantage outweighs the travel inconvenience, for central banking -or at least European central banking- has a firmly established association with good living.”

John Brooks (writer) (1920–1993) American writer

Business Adventures: Twelve Classic Tales from the World of Wall Street

Alfred P. Sloan (1875–1966) American businessman

Source: My Years with General Motors, 1963, p. 173 (2015 edition)

“Economic and monetary union…is incompatible with independent sovereign states with control over their own fiscal and monetary policies. It would be impossible…to have irrevocably fixed exchange rates while individual countries retained independent monetary policies…such a system could never have the credibility necessary to persuade the market that there was no risk of realignment. Thus EMU inevitably implies a single European currency, with monetary decisions…taken not by national Governments and/or central banks, but by a European Central Bank. Nor would individual countries be able to retain responsibility for fiscal policy. With a single European monetary policy there would need to be central control over the size of budget deficits and, particularly, over their financing. New European institutions would be required, to determine overall Community fiscal policy and agree the distribution of deficits between individual Member States…It is clear that Economic and Monetary Union implies nothing less than European Government…and political union: the United States of Europe. That is simply not on the agenda now, nor will it be for the forseeable future.”

Nigel Lawson (1932) British Conservative politician and journalist

Speech to the Royal Institute for International Affairs, Chatham House (25 January 1989), quoted in The View from No. 11: Memoirs of a Tory Radical (London: Bantam, 1992), p. 910.

“The most serious problems lie in the financial sphere, where the economy’s debt overhead has grown more rapidly than the ‘real’ economy’s ability to carry this debt. … The essence of the global financial bubble is that savings are diverted to inflate the stock market, bond market and real estate prices rather than to build new factories and employ more labor.”

Michael Hudson (economist) (1939) American economist

Financial Capitalism v. Industrial Capitalism http://michael-hudson.com/1998/09/financial-capitalism-v-industrial-capitalism/ (September 3, 1998) <br class="br">Michael-Hudson.com, 1998-

“Competition is the final price determinant and competitive prices may result in profits which force you to accept a rate of return less than you hoped for, or for that matter to accept temporary losses. And, in times of inflation, the rate-of-return concept comes up against the problem of assets undervalued in terms of replacement. Nevertheless, no other financial principle with which I am acquainted serves better than rate of return as an objective aid to business judgment. This principle had governed the thinking of the Finance Committee of General Motors since 1917.”

Alfred P. Sloan (1875–1966) American businessman

Source: My Years with General Motors, 1963, p. 140

“The market can quickly seize up. Prices don't adjust in a smooth continuous fashion, but instead abruptly reconfigure themselves, like the earth's crust during an earthquake.”

David Orrell (1962) Canadian mathematician

Source: The Other Side Of The Coin (2008), Chapter 6, At Rest Versus In Motion, p. 195

“[Central banks might have to intervene to counter "perverse" or "grossly excessive" speculation. ] By such means, the monetary authorities can attempt to make the market for foreign exchange approximate toward what it would have been if there had been free competitive speculation with correct foresight of future movements. In this case all that the authorities have to do is to anticipate more correctly than private speculators the future course of exchange rates. And in so far as they do so they will make a profit at the expense of the private speculator.”

James Meade (1907–1995) British economist

James Meade (1951), The theory of international economic policy, Vol. 1, p. 224; as cited in: Peter B. Kenen (1994), Exchange Rates and the Monetary System, p. 74

“The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices… losses in output and employment (and pressure on the European central bank to inflate) will predominate.”

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Rudiger Dornbusch10

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