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The US is not the first test of democracy.

And another paper, this specific to the EU: ----------- Causality for economic growth is difficult to ascertain, even in hindsight, which makes predicting economic growth in the future even more troublesome. The European Union (EU) and European Monetary Union (EMU) are fairly recent attempts at a unified Europe, but they are not the first attempts. Since the 1940s, the nation-states of Europe have been working on how to carefully balance the need for economic stability and growth, and the want for national sovereignty. Compared to the early 20th century, Europe is now far closer to a unified continent, but is this a step in the right direction? By examining the successes and failures of the Bretton Woods and European Snake Systems, we can attempt to determine what the future holds for the EU. The economic and political ramifications of this system are tied together so strongly that despite potential benefits from a unified Europe, the history of the continent has seen each unification system crumble and eventually fail for various reasons. What has sometimes been called the “Unholy Trinity” is the idea that a country can not simultaneously control their domestic monetary policy, while allowing free capital flows across borders, and a fixed or managed exchange rate. By examining the history of the EU and EMS to date and comparing them to the previous systems, we see that the future of Europe is not in monetary and political unification. All of this, of course, is !@#$%^&*uming that unification is indeed beneficial to Europe, a claim that is questionable. The Bretton Woods System was the brainchild of a combination of British and American thinkers. John Maynard Keynes and Harry Dexter White each wrote a plan for the international monetary order, which were the basis for the “Joint Statement” and Articles of Agreement that established the monetary system for Europe. The Keynes Plan called for a more regulated system, while the White Plan intended to have relatively free controls with an international body to veto changes. Their reasoning for each plan differed. Keynes summarized his view when he said: To suppose that there exists some smoothly functioning automatic mechanism of adjustment which preserves equilibrium if we only trust to methods of laissez-faire is a doctrinaire delusion which disregards the lessons of historical experience without having behind it the support of sound theory. Yet, the comprised agreement’s quotas appeared more similar to the White Plan of free controls. The White Plan called for $5 billion, while the Keynes Plan called for $23 billion, while the final plan financed the process with $8.8 billion. Keynes was perhaps not accounting for the reality of the ability of an international body to acquire funds from the United States, as White tried to convince him in a letter. Hindsight shows that this final figure was far too small. There was a vast shortage of necessities, such as food, in Europe following the war. Under the Marshall Plan, the United States ended up extending large aid packages to Europe anyway, and the International Monetary Fund (IMF) was created in 1948. The combination of the IMF, adjustable exchange rates, and limited capital flows were the intended mechanisms to begin economic reconstruction. The period of growth following the creation of the Bretton Woods System happened despite the system, not because of it. Because of an attempt to control domestic monetary policy, there was a lack of coordinated effort among the European powers. Countries had no option to devalue their currency to promote exports, but even if they did, there was nobody to export to. It resembled a prisoner’s dilemma – no countries wanted to import, only export, and the result was that nobody exported. A unified liberalization of capital flows would have seen a higher standard of living, but instead countries feared imports lowering their own standard of living. The Bretton Woods system sought to restrict foreign capital flows, but the investment caused by the beginning of an alliance against Communism happened despite the intended restrictions, and this was one reason behind growth. Capital from the United States entering Europe came as Keynes originally had wanted under his plan. This is the most apparent of events happening despite Bretton Woods, not because of it. If the Bretton Woods system had enacted a plan more similar to the Keynes Plan than the White Plan, this flow of capital from the United States would have begun earlier and been more effective. Bretton Woods sought to insulate against the pressures of balance of payments by limiting capital flows, but market actors learned the loopholes to cir!@#$%^&*vent these restrictions. This put the European states into a difficult situation. Countries had to defend parity when a readjustment might have been the correct move, else there would be an enormous outflow of capital. Even the slightest hint of readjustment might send market actors into a period of uncertainty. These attempts at parity were generally bad for the growth of Europe, and eventually for the United States’ ability to control their own currency. Bretton Woods finally collapsed with the transition to floating exchange rates in the early 1970s after it became apparent that continuation under the system could lead to economic ruin worldwide. These limits on capital flows in the Bretton Woods system resemble the caps on incentives in the European Union today. The intention of each of these systems was to level the playing field among the European states, but the reality is that the private sector suffers by being unable to move to the best location. It is not accidental that capital flows out of some countries and into others. Restrictions on these capital flows are detrimental to the economic health of the region as the private sectors become less productive. To prevent “unfair” practices, the EU caps the ability of each of their members to entice investment, at the expensive of economic prosperity. While it is true that no EU member will be able to lose investment to a neighbor, neither will they be able to lure the investment from a neighbor, and thus another tool of the EU member states to manage their economies is lost. The lesson to be learned from the Bretton Woods System is that the European powers can not effectively regulate capital flows, because each nation-state has a political responsibility to their cons-*BAD WORD*-uents. Bretton Woods relied on the United States to run a deficit to avoid a dollar shortage of liquidity in the world, and the crisis of the dollar proved the gold exchange standard is fundamentally flawed, what is now called the Triffin Dilemma. The dilemma suggests that to stop speculation against the dollar, the U.S.’s deficit spending would have to stop, but that would cause a liquidity crisis as the supply of dollars became too small to continue rebuilding Europe. To avoid a liquidity crisis, the U.S. would have to continue deficit spending, which would lead to destabilization of the dollar and a crisis of confidence in the United States. Bretton Woods made the !@#$%^&*umption that the U.S. would always be able to stabilize economic policy, but in the 1960s, spending on social programs and the Vietnam War led to inflation. Other governments, responsible for defending their peg rates, defended them and continued this inflation, showing the flaw in the Bretton Woods System’s ability to manage payment imbalances. The answer had to be to move to floating exchange rates. The Bretton Woods system had several flaws that are not solved in the European Union. There is still a political responsibility of each nation-state to its own cons-*BAD WORD*-uents, and that will not ever change. The European systems of unification can only become effective when there is a convergence in the interests of cons-*BAD WORD*-uents continent-wide. Unlike Bretton Woods, the EU does at least take steps to prevent reliance on the United States – in fact there is no reliance on the dollar with the creation of the Euro. These lessons were not learned quickly, however, as is demonstrated by the brief existence of the European Snake. The system of exchange rates in the 1970s was not perfectly floating. Following the Werner Report, exchange rates were allowed to float within a narrow band that was determined by a peg to the dollar. When graphed, this would look like a snake moving through a tunnel, hence the name given to it, the Snake. In 1973, when it was decided to let the dollar float as well, the “tunnel” disappeared, as the dollar was no longer stably pegged. Unlike Bretton Woods, the Snake was extremely short-lived. Britain stopped participating in 1972, Italy in 1973, and France in 1974 (although they rejoined a year later, a switch to expansionist fiscal policies forced them to leave again in 1976). The Snake was extremely ill suited to stabilizing exchange rates. The OPEC price-shock showed that the effects differed sharply from nation to nation, and a unified policy that required narrow floating exchange rates forced nations to withdraw from the system to deal with pressing domestic concerns. For instance, France’s expansionary policies during this period forced them to leave the Snake. Meanwhile, Germany made demands of the other participating nations in the Frankfurt realignment in exchange for their continued participation in the system. Various countries’ politicians and policymakers saw different responses to the shock as the correct measures to take, leading to a disunity of policy that contrasted with the motives behind the Snake. The intention of the Snake was to have Economic and Monetary Union in Europe by 1980, but by the late 1970s it became obvious this was an impossible goal. The lack of policy coordination sealed the grave of the Snake. While it may be easy to simply blame the demise of the Snake on its poor structure, the events during the time of the Snake were not especially conducive to European unity. The OPEC price-shock forced a disunity of policy, yet there is not a system in the EU to provide for similar situations. The cap on deficit spending (3% of GDP) will face a similar problem when the European economy faces a price shock – member-states will be unable to spend their way out of trouble. The EU has been lucky in that it hasn’t faced the same sort of problematic environment the Snake failed in. From the ashes of the Snake came the European Monetary System (EMS). While this system seemed to work in figuring out what to do with exchange-rates by again pegging with a slight float, unemployment was extremely high during this period. Because Germany was the anchor of the system, German desire for low inflation limited the ability of other governments to manipulate their macroeconomic policy to lower unemployment. Instead, governments used microeconomic policies to create social programs that were highly inefficient and inflexible. Despite these problems, the EMS was largely successful through the 1980s in stabilizing exchange rates. However, this changed in 1992 when, following speculative attacks in the currency market, Italy and Britain left the EMS. In 1993, the allowed fluctuation in exchange rate was increased from +/- 2.25% to +/- 15.00%. This change was following German reunification and a weakening of the dollar. This new freedom allowed currencies to revalue, but with a new margin of 30%, one had to start questioning whether the system of floating-pegs was the correct system. Under EMS, countries pursued different macroeconomic policies, and there was no attempt at setting a standard to manage inflation other than to use Germany as an anchor. In his 2001 book, Money and Power in Europe, Matthias Kaelberer suggests that “Germany’s position as standard setter lost legitimacy because other EMS members became unwilling or unable to adjust to Germany’s standard through the traditional means of domestic or external adjustment.” This is a similar reason for collapse as the Bretton Woods and Snake Systems suffered. There appears a fundamental problem in attempting to have a unified monetary system without a unified political policy. With Bretton Woods, Snake, and EMS all collapsing, a common thread became apparent; a difference in policy preference among the European nations and attempts to converge policy lead to the collapse of the system. Yet, the European Union continues the previous attempts to unify Europe. Is it a different kind of system? The EU unifies the separate nations of Europe in more ways than one. For the first time, the EU introduces a common currency, the Euro. The Euro is not a currency meant to replace, per se, the independent currencies of each member nation, but rather to compete with the dollar and the yen. For the first time there is a real European bloc, a sort of “United States of Europe” that can be compared loosely in structure to the United States of America. But the mindset of the U.S. differs from that of Europe, and this is one of the primary flaws in any ability to unify the region. Federalism in the United States was a response to the dangers external threats posed. France and Spain posed significant threats each state was incapable of dealing with alone. Europe, on the other hand, is only threatened by itself – the unification of the European states is to prevent internal conflicts. This is a different mindset, less conducive to cooperation than the U.S.’s. This difference in policies and preferences manifests in several different areas. With the creation of the Euro, there must be an attempt at convergence of monetary policy, determining an ideal unemployment rate, as well as managed inflation. Given the varying preferences (as usual, Germany’s despise of inflation takes the forefront), this alone is a challenging prospect. Yet, there are other policy differences that must be reconciled. With fifteen nations participating in the EU so far, it becomes readily apparent that a convergence of policy is impossible, even ignoring that previous attempts have failed. The EU consists of Belgium, Germany, France, Italy, Luxembourg, the Netherlands, Denmark, Ireland, the United Kingdom, Greece, Spain, Portugal, Austria, Finland, and Sweden. Ten more countries will be added in 2004. There are five ins-*BAD WORD*-utions in the EU. The European Parliament is directly elected by the citizens of the EU. The Council of the European Union represents each member state. The European Commission, along with the previous two ins-*BAD WORD*-utions, all combine in the decision-making process of the EU. Along with these, the Court of Justices upholds European law, and the Court of Auditors monitors the EU finances. In addition, two important bodies in the EU are the European Central Bank (ECB) and the European Investment Bank. The Investment Bank is responsible for financing EU investments. The ECB controls the EU monetary policy. Unlike the United States, the EU member-states are all still independent nations, and unlike a treaty-organization, the unifying systems extend to trade, military conflict, and nearly all exercises of sovereign power. The ECB is intended to remain completely independent of the policy preferences of each participating nation, and to instead determine monetary policy that is best for the entire European bloc. This sort of organization is wholly unique as it is, in essence, pooled sovereignty. Pooled sovereignty can be a powerful tool, as the EU has already demonstrated in its tariff negotiations with the United States, but differences in policy make it hard to determine what to use that sovereignty for. Negotiating with the United States and other world powers is simpler for the group to do together, but only if they can determine what they collectively want. Some things, such as lowering the United States’ tariffs, are a simple and direct goal that all EU members can agree on. Others, such as determining internal policies or regulating programs, are not as straightforward. Aside from the practical differences among the European countries in, for instance, their balancing of inflation versus unemployment, each member state has a strong cultural history that they are weary of having !@#$%^&*imilated into a European iden-*BAD WORD*-y. An example is France, a country that has outlawed “franglais” (a mixture of French and English) on television. Yet, now France is supposed to share a currency with Germany? For this reason, a lot of superficial debate over the Euro took place. For instance, each state prints its own “kind” of Euro with something unique to their nation on the face of the bill. Each member-state is giving up a part of their culture to participate in the EU in an attempt to again push Europe into the forefront of world power past the United States, but at some point each member will draw the line – until this barrier disappears, there can not be a truly unified Europe. It is somewhat ironic that the EU is an attempt to promote peace and prosperity while maintaining the culture of each member state, when that culture is universally one of war and conflict. The reason for European unification was war-weariness following the destructiveness of World War II. For centuries before that war, the states of Europe had fought amongst each other. Following WWII, Europe has successfully rebuilt and not had any outright internal conflicts, that much at least can be said in praise of the new move towards unification. Yet, this peace and prosperity isn’t unique to Europe. In reality, no democratic governments wage war on each other . The peace felt in Europe can as easily be attributed to their forms of government as to their membership in the European Union. It was most likely the triumph of Democracy and Capitalism over Communism through the transfer of capital in the Marshall Plan that had the longest lasting effect on the stability of the region. This stability will likely continue into the future, regardless of the level of unification among current EU members. Like the systems preceding it, the EU attempts to coordinate policy that will inevitably lead to the failure of the system as a whole. The Stability and Growth Pact (SGP) is essential for the coordination of fiscal policy in the European Monetary Union (EMS), and therefore vital to any attempts at unification. The most important point of this pact is to restrict the maximum budget deficit of each member state to 3 percent of GDP in the short-term and in the medium-term, a target, “close to balance or in surplus.” Already, the members of the EU are violating this maximum deficit. This problem is a manifestation of the problems each of the preceding systems had suc!@#$%^&*bed to. In 2002, Germany and Portugal passed the deficit cap. The United States, unhindered by the policies the EU members must adhere to, far surp!@#$%^&*es the 3% of GDP budget deficit. If two countries have already violated the SGP, what sort of long term enforceability does the pact have? If the United States is a model of economic prosperity in the modern world, is it important to note that they would never fit the requirements under the SGP? It is important to realize this, and to understand that in all likelihood the future will show more countries breaking this deficit cap when similar events to the OPEC price-shock in the 1970s occur. EU members will be unable to satisfy their cons-*BAD WORD*-uents while remaining part of the EU. Even if the EU manages to maintain the 3% of GDP deficit cap, it may not be an appropriate cap. The United States ran the most negative balance of payments in 2002, while Japan ran the most positive – the EU must reevaluate whether their policies dictated in the SGP are wise. Up until this point, we’ve been operating under the !@#$%^&*umption that unification is beneficial. This !@#$%^&*umption, however, must be questioned. Unification provides benefits, but has more than one harmful side effect. The loss of some cultural iden-*BAD WORD*-y among member-states is unavoidable, as is the loss of mobility among politicians. Similar to the choices some developing nations make to tie their hands by implementing an independent central bank to attract investors, politicians in the EU member-states have tied their own hands – but unlike the implementation of independent central banks, there isn’t a benefit immediately gained by joining the EU. The creation of an independent central bank calls for a credible commitment to not seize the bank to control monetary policy for the bank to succeed in attracting investment. There is not this credible commitment for the EU members to stand by the policies dictated in the SGP. Germany and Portugal have already violated these policies, and under previous European unification systems, politicians have chosen new domestic policies and decided to leave the group, such as France in 1976. It is important to remember that in a democracy, each new election represents a new government, one that is not entirely bound to the policies of the preceding government. Changes in policies after elections can result to changes made in the dynamic between EU members that challenges the foundations of a system. While the politicians who originally orchestrated the creation of a unification system were inevitably favorable towards cooperation, there is not a guarantee that future politicians will maintain the same policies. In reality, these politicians may see the pooling of sovereignty as a loss of their own ability to do their job. The European Union exemplifies the destruction of national sovereignty by globalization in recent years. The EU doesn’t appear to have a solution to OPEC oil-shocks which affect members in differing degrees, the problem that ended the Snake. Fiscal federalism, as Eichengreen calls it in his 1996 book Globalizing Capital, is not a solution to these differing policy needs. EU members do not have the tools to adequately deal with a price shock – their inability to spend past the deficit cap hampers their capabilities in maintaining their own nation-state’s economies. The Very-Short-Term-Financing Facility is a good idea, but in reality it is an international body telling a nation-state how they can spend their own money. We can liken the fiscal federalism of the EU/EMU to the fiscal federalism of the United States. Fiscal federalism works in the United States because the overwhelming mindset among Americans is that they are, indeed, Americans, and not New Yorkers or Missourians or Floridians. Europeans, however, are French or Dutch or German, not simply European. This intangible carries weight, it isn’t a superficial element. Nation-states are functionally equal, but not equally capable. All states collect taxes, for instance, but do the citizens willingly give their money to the government, or does the government need to kick down doors and send goons as tax collectors? This difference can largely be determined by the idea of common destiny. If the people in a democracy see a common good, they will be more cooperative. The problem in European unification is that common destiny is nation-specific, not continent-specific. Because of this lack of common destiny among all Europeans, fiscal federalism is a challenging prospect. This poor implementation of fiscal federalism is readily visible by comparing Germany’s inflation-killing tactics to the rest of Europe’s desire for low unemployment. Under the EMS, it was the German Bundesbank that provided the anchor for Europe’s monetary policy, but under the EU/EMU there is not one country determining policy. In the EMU, it is the European Central Bank that determines monetary policy without favoring any country over another. Yet, the Governing Council of the ECB is inevitably always filled with members from each country. The United States provides a reasonable model for understanding this system. In the U.S. Congress, each member is supposed to vote for what is best for the country, yet inevitably votes for what is best for their cons-*BAD WORD*-uents. This is where James Madison feared democracy might become too risk-averse and unable to reach decisions when he wrote in the Federalist Papers. Likewise, the ECB, as well as all the other EU/EMU ins-*BAD WORD*-utions, has inevitable and unavoidable inherent problems. The intention is to be neutral, or to not have any connection to politicians, but this connection must be present. One might try to counter this argument by pointing to the congress of the United States and calling it a success, but compare the cons-*BAD WORD*-uents of each state represented in the U.S. to those in the EU. The U.S. is far more homogeneous, largely because of the history of the nation and the mindset of her people. It is highly unlikely that the French are very favorable to their politicians when a new policy favoring Germans over themselves is announced. Any attempt to remain neutral is impossible; there is always going to be a difference between the policy objectives of each nation-state. This difference, and inability to converge on an agreeable set of policies, has been a component of the downfall of each of the systems of unification that preceded the EU, and will be a component in the failure of the EU as well. While the EU has been fairly successful to date, the system has not yet been challenged by the same threats that the preceding systems dealt with. Price shocks and changes in domestic policies in member states will result in clashing over policy issues. The nations joining the EU in the near future will only serve to further add to the overwhelming group of conflicting policy desires. There is an inherent difference between each member-state of the EU due to a culture of conflict and war with the other member-states, and there is no immediate feeling of common destiny. The loss of cultural uniqueness and sovereignty may be too much for some member-states to bear, which will become apparent when the EU faces significant economic threats through price shocks or compe-*BAD WORD*-ion with other regions. The EU does have an advantage over the past systems in that they have moved closer to monetary unification with the Euro, but there are still significant problems with a loss of sovereignty in the ability to manipulate their own currency. An inability to tailor policy to domestic situations leaves politicians without an important tool to satisfy cons-*BAD WORD*-uents. Policy is instead tailored towards what is considered best for the entire European bloc, which ends up stifling the abilities of each member-state to provide important incentives to lure foreign investment, and in reality, compete with the United States and Asian financial centers. At least, unlike the Bretton Woods system, the new EU appears to be taking Keynes’ original ideas to heart. This system is less laissez-faire than any of the preceding; it is a true grouping of powerful ins-*BAD WORD*-utions that represent the European people and economy. There is no doubt that the EU has met moderate success, but then again many considered Bretton Woods in the same light in its very short-term ability to turn around the economies in Europe. However, like Bretton Woods, the Snake, and EMS, the EU will not last indefinitely into the future – some unpredictable event will show the inherent problems in unifying Europe. If nothing else, the inability to abide by The Stability and Growth Act will lead to sanctions on many European nation-states, further hurting their economies. Like the systems before it, the moderate prosperity in Europe is despite the EU/EMU, not because of it, and at some point in this century this will become apparent and seal the fate of another failed attempt at European unification.

Hate to give a canned response, but I don't frequent these forums anymore. Anyway, a paper on globalization ... I think I even posted this here. -------------- Globalization, in recent years, has significantly hampered the sovereign ability of nation-states to implement policy to best serve their own economic interests. The interests of the world economic community, or of more economically powerful nation-states, have largely replaced any international interests in the rights of nation-states to control their economic outcomes. This theory is supported through several events in recent history that demonstrate such injury to sovereign powers; the spread of reliance on the U.S. dollar, the rise of the European Union and resulting economic ins-*BAD WORD*-utions, International Monetary Fund (IMF) plans and pressures towards a policy of independent central banking, and the infection of Brazil’s economy as a result of crisis in Russia (a microcosm of moral hazard). The evidence presented suggests an injury to sovereignty in economically subordinate nation-states and world economy leading nation-states alike. Sovereignty, defined in real terms, could be seen as a nation-state’s fundamental ability to tailor fiscal and monetary policy to be responsive to the needs of the nation-state’s domestic economy. In “The Geography of Money”, Benjamin Cohen suggests the catch phrase of “One Nation/One Money”. Although the conclusions he draws differ from mine, the evidence he presents is exemplary for my case. Why is currency control (or the right to print and regulate your own currency) a fundamental component to economic sovereignty? Control over printing money equates control over the quan-*BAD WORD*-y of money in circulation, and therefore control of interest rates, arguably one of the best tools to bolster the business cycles of a capitalist economy. Without the ability to choose between unemployment and inflation centered policies, a nation-state loses a key sovereign ability to satisfy her people. Seniorage also presents an irrefutable tool of exercising sovereignty. Where it is impossible to collect taxes, due perhaps to civil conflict or disorganization, a seniorage tax can raise funds for a nation-state. Indeed, this ability is hampered by a currency peg or floating system, but completely removed by using another nation-state’s currency. The prominence of the U.S. dollar has granted the United States a power over their domestic and foreign policies that a nation-state without its own currency does not have, as is the situation in several South American states. This was irrefutably proven when the United States began helping funding of their war in Vietnam by what I’d like to call the “World Tax.” What could be a more powerful tool than funding a war with the money of people from other countries; money that is not borrowed, but simply taken? If said war were against a country entirely reliant on the U.S. dollar, they could simply be cut off from the currency, and the war would be all but won. Why do countries dollarize then? In recent history it has been after a financial crisis, as well as in emerging democracies, who oft struggle with the implementation of their own currency. But, this is not to say there isn’t a potential advantage to sovereignty. When China pegged to the dollar in the mid-1990s, they made it incredibly hard for the U.S. to export to their markets, yet incredibly easy for China to export to the U.S. Indeed, there is short-term growth to be gained through moves such as those made by China (which should soon be stifled with the re-peg), but does this short-term growth outweigh the utter loss of sovereignty over currency, not to mention the injury to nationalism over the reliance on another country, or “monetary insulation”? Cohen does not disagree with me – he concludes that public policy can not cope, and “monetary invasion” or the creation of currency-blocs, is imminent. In realistic terms, as long as the scope of currency is larger than the scope of political control over domestic affairs, through globalization, there will be a skew of sovereignty towards those controlling the regulation of currency. Questionable, however, is the absolute gain of sovereignty of the currency regulating nation-states. That is to say, has the United States infringed on their own ability to respond to domestic needs by taking on a responsibility to the international marketplace? If unemployment is low in the U.S., but is through the roof in a developing nation that has dollarized, what stance on monetary policy should the Federal Reserve take, and will that stance be detrimental to domestic stability and/or growth? When Japan bought U.S. dollars to stimulate their own economy by keeping exports up, intervening to keep the dollar strong, the U.S.’s intention as the sovereign regulator of dollars, to allow the dollar to naturally devalue, was undermined. The potential for infringements on sovereignty due to globalization of currency across One Nation/One Money lines can be felt in both the country-of-origin of the prominent currency and all nation-states who rely on that currency, and tragedy can ensue. A prime example of this would be the failure of Bretton Woods, as Barry Eichengreen discusses in “Globalizing Capital”. In the 1960s, the weakening of the U.S. dollar, with external oil shocks and the explosion in the price of gold, led to extensive ripple effects around the global economy. Foreign central banks absorbed dollars to avoid further devalue of the U.S. dollar, causing spiked inflation – yet Germany, of all countries the most worried of hyper-inflation, hesitated to revalue. Their history in the preceding part of the century was a strong component of their policy to avoid inflation at nearly all costs. Their economy, as a result of reliance on the Bretton Woods system, had the potential to turn in the completely opposite direction of their stated sovereign intention to avoid inflation. The European Union could pose similar problems in present day. The European Union is a startling example of a move towards globalization, or at least towards a European bloc. With the Euro as a currency shared among these nations, even with the central regulation belonging to a board of the nation-states involved, the sovereign abilities of each state to manage their domestic stability and growth simultaneously appears challenging to say the least. With Germany’s strong support for fighting inflation, will the other European Monetary System members suc!@#$%^&*b to that desire, or will there be a lack of policy cohesion as there was under the European Snake? The EM addresses oil-shocks from OPEC, which certainly contributed to the failure of Snake, where the members were affected to different degrees, and the appropriate response was not a unified policy, in a strange manner. Fiscal federalism, as Eichengreen calls it, is a policy that incredibly infringes on sovereign power. Cir!@#$%^&*stances in domestic affairs certainly arise often which could not be predicted in fiscal policy – will members of the EM be able to address these concerns without fear of repercussions for deficit spending? There is, of course, the Very-Short-Term-Financing Facility, but this still allows an international ins-*BAD WORD*-ution to determine when a nation-state can spend its own money. History shows us the difficulty in enforcing fiscal federalism – several EM members have already violated specific regulations, and the United States, were it a member of the EM, would not even come close to meeting their requirements. Yet, the actions of the EU appear to be at least some sort of attempt at mimicking U.S. success as an economic superpower. One might liken political federalism in the United States at the turn of the 19th century, to the fiscal federalism of the European Union at the turn of the 21st century. Yet, one argument for how this apparently overwhelming restriction on sovereignty is justified, is one political in nature; that Europe sees themselves falling so far off the throne of world domination the U.S. has usurped they are willing to give sovereignty up to a higher, European, purpose. Such is the result of the globalization of political power, in which a country an ocean away can dominate political affairs. This political globalization goes hand in hand with economic globalization, so one might argue that EU members are only giving up a sovereignty that is becoming more and more useless compared to the authority of the United States. The hazard to sovereignty the Europeans face is similar, in ways, to those worries developing nations face by accepting International Monetary Fund packages as a last resort, with control over monetary policy being moved from politicians to an independent central bank, or in essence from the independent central bank to IMF (non-governmental) officials. Even without IMF intervention, it should be noted that independent central banking is at least partially a result of globalization, and removes a level of sovereignty. If a central bank removes a politician’s (of a nation-state which is a republic) ability to manipulate monetary policy, they remove a tool subject to abuse, but also the politicians ability to voice the preferences of the people. If the central bank recognizes long term inflationary problems leading to a major recession, they may cause a short term rise in unemployment, removing the ability of the people to dictate policy. Even more prominent as a sovereignty restriction would be a monetary policy that, as in the United states, takes into account the world economy in addition to the domestic economy; an absolute result of the globalization of the dollar. When the IMF structures a package that controls fiscal and monetary policy in a nation-state, even if tailored specifically to bring said nation-state out of crisis, it is an infringement of the sovereignty of that nation-state. This argument could easily tangent into a new definition of sovereignty, and whether it is within the sovereign right of a nation-state run by a dictator to create policy detrimental both to domestic and world markets. As we have defined sovereignty already to mean that it is, indeed, the sovereign authority of a nation-state to be wrong, it is an interesting dilemma. International markets (that is to say, globalization) can force a move to independent central banking as a means of signaling a strong market for foreign investment. The prominence of independent central banking in the 1990’s certainly has led to a subtle “market forcing” of many nation-states to implement hands-off policies. A whisper of capital controls can scare off international investment so quickly that it becomes in the best interest of a nation-state to tie their own hands. To scare off investment, there can also be uncertainty about the reliability of an independent central bank to be truly independent, meaning to be protected from the ceasing of monetary policy away from the bank. As Sylvia Maxfield discusses in “The International Political Economy of Central Banking in Developing Countries”, Brazil’s debate over a central bank took nineteen years, because of the political uncertainty of the country. Globalization has led to the suggestion that for nation-states to be successful, they must be players in the international market, or face poverty. And to be players in the international market, meaning to invest capital, nation-states frequently need to tie their hands from affecting monetary policy for political agendas. Such a train of thought leads to the inference that globalization can remove the political power of a nation-states major players, or their sovereign ability to dictate policy and create growth in their own country without subscribing to international ideals (for instance, the current ideal of democracy and capitalism). IMF packages do not always specifically tailor themselves to recovery from crisis – sometimes the packages are meant to provide only enough relief to quarantine the crisis. To do otherwise can result in moral hazard, crash, and further crisis. These considerations the IMF must make in designing a package for a nation-state in crisis can lead to a package that detrimentally affects the recipient – certainly an infringement on their sovereignty to manage their growth, stability, inflation, and unemployment. An idea, to prevent moral hazard and the propagation of crisis, suggested by Charles Kindleberger in “Manias, Panics, and Crashes”, is letting the crisis burn-out. That is to say, take absolutely no steps in rectifying the temporary dilemma, in favor of long term benefits. The dangers of a poverty trap are possible, but there is also a potential infringement on sovereignty, to those completely separated from the crisis. Investors, paying off poor investments in Russia, start selling out in Brazil, since Brazil seems the least stable place to invest. The prophecy is self-fulfilling, and Brazil – entirely across the world – is infected with the Russian financial crisis. This involvement in world affairs, simply being an actor, leaves a nation-state’s economy open to complete destruction with no particular domestic economic problems. If sovereignty is defined as a nation-state’s ability to manage (read: create policy for) its’ growth, stability, inflation, and unemployment, this is the ultimate infringement on sovereignty. It would be naïve to say that there is no effect on sovereignty by globalization – but whether that effect is positive or negative depends fundamentally on whether sovereignty is a nation-state’s measure of control in the world economy, or the domestic economy. One might argue, in refuting my claims stated here, that for all the losses of control over domestic monetary and fiscal policy, there is a proportional gain in control over world policies. When an IMF package removes a nation-state’s control over some policies, it is a demonstration that the nation-state has enough sway in international, global markets to have warranted receiving attention in the first place. Cohen, in particular, agreed with my !@#$%^&*essment of globalization’s affect on sovereignty, but he suggests that it is a moot argument, because the Westphalian model of nation-states is a recent anomaly, and will soon be outdated. Given the information I’ve explored here, I’m tempted to agree with Cohen. That a European bloc, Asian bloc, and American bloc have already emerged is evident. Whether nation-states will continue managing their monetary and fiscal policies to control their domestic economies, or larger bloc-states will emerge as the EU appears to be, is an interesting question that the immediate future may begin to answer.

This article is at coverups.com, huh?

When you -*BAD WORD*-gots started insulting me from the get-go, you dug yourself a deep grave. Came back to bite you, maybe just a little bit? :muhah:

The rules of the forum state that if you can't make bold claims without posting any sources. Please ban everyone from this forum.

Procreation isn't an instinct. Please leave the thread now so I can talk to less dumbererer people. How can you miss such basic core arguements? Do you read the posts or just click quote and and write from memory of your troubled childhood? Quoting myself, because you're too -*BAD WORD*-ing stupid to read. Uh. This is a post you replied to. How did you miss 90% of the post? Quoting you and replying: Once again. -*BAD WORD*-ing simple minded. How come I have to explain this stuff to you? Are you stupid? And the United States doesn't own ever inch of land in what is called the "Continental United States." Don't be so -*BAD WORD*-ing rediculous and simple (I come back to that word often because you bring me there). I can't even begin to explain this concept because it blows my mind that you don't get it. You must be kidding. Maybe god dictated geography and you have the lines drawn out in your head. Let someone else in this thread stoop to the intelligence required to make you understand something. And now, you've walked yourself into a trap you set for your dumb!@#$%^&* self: Lets see if you can keep up as I slowly reproduce what I said. Me: This is a description of your attempt to made attacks at me instead of addressing any valid points. This was your attempt at making up for your inferior ability to speak. "Isn't" translates to "is not". Would you like me to define those two words, or maybe provide a link to a dictionary? This qualifies your strategy. I give praise to your attempt to compensate for idiocy. Here is WHY you employed your strategy. Again, idiocy. This is me announcing that your strategy doesn't work. And this is where you get shot down, and probably close the thread in disgust at having talked yourself into a corner. Lets bring this whole quote together.... And for entertainment value we'll toss in your quote, so should you edit your post (which I would imagine you will), we won't lose the fun we're having at your expense. You: Oh, and 'meant' is spelt with an 'a' (not suggesting you should check my posts for spelling errors, but I'm not the one trying to avoid the point by using semantics to throw people off the trail of moronic-mind-grease I leave in my wake). Oh and talking about drinking beer makes you cooler than me, sorry, you win. Don't you just hate it when the foundation of your existance gets shaken and you can't come up with a good reason why you're right, so you swat clumbsily with your shriveled and malnourished mind that has grown dusty with lack of use at the reasoning that simply can't be ignored. If you had provided any indication of having a feasible arguement, I wouldn't have had to bloody you so badly.

You're kidding right? Without even dipping my toes into the issue, lets quote your source for a minute here. Who holds "the most conservative view"? "typically ... the conservative religious groups, Christian, Jewish, Muslim, Sikh, etc." Who holds "the most liberal view"? "typically ... by religious liberals, gays, lesbians, mental health professionals and human sexuality researchers." Well okay, lets look at what the conservative and liberal views are then. When answering "What should a homosexual do?", the conservatives say "Choose celibate, or attempt to change their orientation." Lets ignore their improper verbage and continue on. Change their orientation? Is that possible? The conservatives say, "Yes, through counseling and prayer. But it requires effort because it is so addictive." Okay, what effort does it require? The conservatives say that "[repartive therapy] is an effective method to changing homosexuals into heterosexuals." Great, but maybe it could be a problem that Mental Health Professionals say that this is a "potentially dangerous therapy that can lead to suicide"! WHY WOULD WE EVER TRUST THEM!?!?!?! After all, conservatives believe that homosexuality is "perhaps [caused by] demon possession." Do you read your sources? That is, if I can call this a source ... who the -*BAD WORD*- are these people? Ontario what now? Should I put up a website that says the opposite and call it official?

Note: If you ask me to cite sources for this unbelievably important period in world history again, I will eat your face. If you don't know it, you should go read a book. Fast.

Um, ROFL? No way dude, I just looked up plenty of stuff!!! Its you're turn!! Dude, You haven't posted any of your proof, you can't look stuff up and then state it in an arguement without posting the proof that you read. Case in point. People like to have sex with things they can procreate with. So again I state the arguement against born sexual orientation. If the most basic instinct of a species is to procreate, why would a species be born with the preference to have sex with something it cannot procreate with? Sorry, No where in the quote did i break out any "freedom" arguement in defense of anything. The point I'm trying to make is, if you want to be a part of the catholic church, you have to abide by its laws. If the pope says -*BAD WORD*-ing other men in the -*BAD WORD*- is wrong, guess what.. if you want to be catholic, you cant -*BAD WORD*- other men. Huh? The Holy Roman Empire officially dissolved in the early 1800's. I don't believe they ever completely held Europe either. None the less, are you -*BAD WORD*-ing insane?(BTW, I don't believe there is a heaven, if you'd like to discuss the possibility, make a thread. ) I never claimed to have a complete knowledge of how the government works either, unlike you. Since you were so free to share the fact that you know so much, that was simply an invitation for you to share it with us. Please, take your arguementive "better than though" -*BAD WORD*- back to your mommy. She may praise your antics, but here they make you seem like a 14 year old -*BAD WORD*- that thinks he's billy bad!@#$%^&* cause he's on the internet.This is why I can't talk to you people. Quoting yourself making !@#$%^&*umptions about human nature doesn't cons!@#$%^&*ute proof. Citing reliable sources cons!@#$%^&*utes proof. Not only did you not provide that link the first time, but that link's first line begins quoting a "famous english cop show." I'm sorry if quoting newsweek and the US Consitution was interpretted by you as me NOT citing sources. How does basic instinct of a species have anything to do with sexual orientation? Your blindly ignorant Catholicism has obviously enbedded into your mind the !@#$%^&*umption that humans aren't free willed. You're remarkably simple minded and boring. In 1556 Phillip II took over Spain and the Netherlands from his father. Philip, much like Louis XIV, believed it was his duty as a king appointed by God to go to battle for the Catholic church. With the power of the the Spanish Inquisition he repressed the large Protestant Dutch population until it led them into open rebellion. Spanish Inquisition? Why surely the Catholics would never command a world leader to do something like this! Or maybe you've heard of the Thirty Years' War? I know its a stretch to assume you know anything, but hopefully this is common enough knowledge. I hate to keep bringing it up, but it is quite obvious that my arguements inability to convince you is based on your mal-education and intellectual blindness. I continue to make valid arguements and you continue to fail at rebuffing them, instead spouting personal propoganda and !@#$%^&*umptions. You're simply incorrect, I do not sound like a 14 year old. Everyone here is quite impressed with my entertaining delivery of witty reparte, now that you bring it up, and you just sound like you're clawing for the edges of of the pedestal you were pretending to stand on that I so handily shattered. Your attempt at trying to diffuse my arguement by claiming I am trying to make myself look like an online bad!@#$%^&* sheds light on your interest in this topic; impressing me, instead of trying to reach some knowledgable conclusion. Bringing something like this up is just sad, and I hope you get well soon. Sorry, I'm here to try to educate you so you don't make such poor decisions in life as you have made so far. Consider this shock therapy. Trying to compare -*BAD WORD*- sizes with me instead of addressing the issues at hand isn't a bad strategy when your intellect can't keep up, but I have some bad news - my -*BAD WORD*- is bigger than yours, and I swing it where I please.

This article is pretty rediculous btw, and I don't agree with it. What should we be expected to do if there is a major terrorist attack on election day? What if the trains get stopped and the planes get grounded, or we lose electricity? We need to have a plan for what happens. Maybe Bush would like to use it to impose dictatorship, but intentions aside, Congress needs to figure out what to do.

You have no morals if you aren't religious? Anyway, your nonsensicle circular logic lost me, so I can't follow this thread anymore. I have no idea what any word in your post meant. I'm just not smart enough. I shall retreat and leave this thread to you intellectuals.

No. You proide substantial proof that they are not. I just looked up plenty of stuff, its your turn, since you haven’t backed anything up yet. Okay, now you’re just making no sense. You just said this, “In Texas, you have to pay Texas State income taxes. If people around the country do not pay Texas State income taxes, they are breaking the law.” Stay on topic please. And if someone wants to bone another dude, that is their right. What are you nuts? Breaking out some “freedom” argument in defense of not allowing gays to get married? Following the directives of the church to lead your life has nothing to do with telling other people how to lead their lives. I’m on my high horse because my horse is -*BAD WORD*-ing bigger than yours. Plus I find something unsettling about what happens when there is a Catholic President and Rome decides to conquer Europe (again). Will the word of god command the mighty arm of the US Armed Forces to destroy the sinners (Muslims, Jews, Protestants… do you believe anyone besides you is going to heaven)? It was an example. Change Tenet’s name to Rumsfeld and the argument is the same. Nice cover up for not being able to explain it yourself. No. I’m making the case that gay sex is moral, and it has nothing to do with legality. I saw the government shouldn’t poke its nose into that kind of business (because apparently Republicans think the government should determine morality in the bedroom but never, ever, ever morality in the boardroom). Uh. Read book good? You need to learn about how the budget comes about. It has a huge, huge amount to do with Congress. Suggesting that the President has “power over” the budget over emphasizes his influence. Again, he commands the military, but he has nothing to do with deciding whether or not he can increase or decrease the size. He asks congress, then they decide for him. Indirect control over the economy? How about “you guys no longer have to pay taxes, WOOHOO” and then the country explodes. That’s a lot of influence. Not to mention he could fire the director of the central bank and appoint a Saudi Arabian who didn’t speak English if he wanted to. Then Bush would pull a string and crank seniorage up to like 50% and make himself rich. If you speak English you probably could have.

The US media, run by democrats, so intensely tries to be fair and unbiased (not to mention laws that require equal airtime devoted to both candidates), that it overcompensates and shows a conservative bias. Lies and the Lying Liars Who Tell Them (Al Franken) gives some nice stats on how often good and bad things about the candidates were reported. Don't have it in front of me - pick up a copy for yourself.

Holy -*BAD WORD*-, how can you people open your mouths and be wrong so often? Why bother coming to the forum and saying something like "Well, I sure don't know my facts, but your claims look WRONG!". 72% of americans do not support gay marriage. The sex with your dog arguement is just -*BAD WORD*-ing rediculous. That is illegal, it is considered a mental disorder, and you are not born wanting to have sex with other species. Having gay sex is not illegal, you are born with your sexual orientation, and it is not a mental disorder. Shut up. Umm, can you read? This isn't the -*BAD WORD*-ing Holy Roman Empire. The first time you mention the word religion or god in a political speach you should get your -*BAD WORD*- impeached. Since the -*BAD WORD*-ing function of democratic government is to protect minorities from the tyranny of the majority, saying something like "because the overwhelming majority support it, it should be a law" pisses me off. The Supreme Court has been knocking aside stupid ideas the majority comes up with for over 200 years. Thats what they are there for, thats what they do, and thats why they're the most important arm of the government. Why should we protect minorities when the majority doesn't want to? Hear anything about ethnic cleansing in Serbia? How about the Spanish Inquisition? Thats what democracy is. If you want to live somewhere homogenous, go to Norway. You support your party? Thats politics? Wait for another directive from Rome to tell you what to do? Holy -*BAD WORD*-, get a -*BAD WORD*-ing education and think for yourself or move to China where you can fall in line and do what you're told by the commune. How can you say something wrong in the executive branch is NOT Bush's fault? If the CIA -*BAD WORD*-s up, its his department, and he -*BAD WORD*-ed up. Blaming the director of the CIA is twice as -*BAD WORD*-ing stupid and blaming Bush. If some joe-shmoe -*BAD WORD*-ed up somewhere, how is it the CIA director's fault and not Bush's? You forget that all of those departments are run by GEORGE W BUSH. He only gets to appoint people to run them because otherwise he wouldn't be able to handle everything at once (which he still can't). Do you people even know how the government works? How can you say "Clinton shrinked the military" and not admit "Clinton grew the economy". Is he ALL POWERFUL only when he does something you don't like? And what do you mean "the deficit will come soon"? The dollar is weak. We are all poorer than we were 4 years ago when you ignore all income and expenditures. Does that not make a -*BAD WORD*-ing difference to you people? Now you're -*BAD WORD*-ing whining that the Democrats have a conspiracy in the Supreme Court because the old justices won't retire? STEVENS, BORN 1920, APPOINTED BY FORD (R ) REHNQUIST, BORN 1924, APPOINTED BY REAGAN ® O'CONNOR, BORN 1930, APPOINTED BY REAGAN ® GINSBURG, BORN 1933, APPOINTED BY CLINTON (D) SCALIA, BORN 1936, APPOINTED BY REAGAN ® KENNEDY, BORN 1936, APPOINTED BY REAGAN ® BREYER, BORN 1938, APPOINTED BY CLINTON (D) SOUTER, BORN 1939, APPOINTED BY BUSH ® THOMAS, BORN 1948, APPOINTED BY BUSH ® You're right, what totally old liberal justices! CONSPIRACY alert. Leave my forum. I'm bored of this topic.