“How many currencies does the world need? Actually, let’s make this more concrete. The euro was a colossal bet on the proposition that Europe, at any rate, needs only one. You will have noticed that the experiment is going badly.”
“Historians of money as diverse as J K Galbraith, Jane Jacobs, Bernard Lietaer, and Niall Ferguson have pointed out that most of history was multi-currency, with distinct currencies linked to cities not countries.”
“In other words, the fastest ever half-century of growth in the US did not take place within a currency union. It was a multi-currency era, even if all the different currencies had the word ‘dollar’ printed on them. Such a result can seem anomalous only from the perspective that leads to our two diagnoses of the euro crisis. But there is another point of view.”
“In the 1970s, the American/Canadian economist Jane Jacobs reached a radically simple insight. Her lifelong interest in urban history convinced her that cities, not countries, drive economics. Cities are messy, unplanned places where people who otherwise would never meet devise joint projects. Hence, Jacobs argued, all innovation happens in cities. It made sense, then, that each city’s currency should follow its business cycle. Forcing two or more cities to share one currency slowly pumps up one city and sickens the others. See southern Italy’s or northern England’s longstanding lag behind Milan or London, despite decades of subsidies.”
“European national currency zones were already too big – the eurozone made something already oversized even worse. The US is rich despite having one currency, and it suffers huge damaging cycles from being locked into that single currency zone.”
“Long protected by exceptional rates of internal labour mobility (three times the rate within France), there are signs that US labour mobility is slowing, and a dollar-bloc handicap is becoming more visible.”