From the FT, Edward Chancellor (again) on the euro as the new Depression-era gold standard:
Several eurozone members, including Italy and Ireland, have seen their production costs rise relative to Germany. Under a floating exchange rate regime, they would simply devalue. Within the eurozone, however, they are forced into deflation to regain competitiveness.
Having surrendered monetary independence long ago, eurozone members are now losing their fiscal freedom of action. Angela Merkel’s Germany, a top creditor nation and modern scourge of profligacy, plays the role of France in the 1930s.
The burden of the euro is getting heavier. Spain’s unemployment rate has reached Great Depression levels. Ireland is experiencing its severest deflation since the 1930s. Greece and possibly Portugal are on the verge of default. The pain thresholds of the eurozone economies may well be lower than in the 1930s, since debt levels are far higher.
In one respect, the euro is worse than the gold standard. The costs of going off gold turned out to be negligible. Leaving the eurozone may be much harder. Any country that signalled such an intention would most likely spark a run on the banking system and a collapse in government lending. The entire eurozone financial system would also suffer collateral damage. Euro-fetters are proving scarcely less agonising and certainly more binding than the golden variety.