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July 13, 2019 - Freedomain Radio - Stefan Molyneux

01:17:52

The Truth About The Euro. Prepare Yourself Accordingly.

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	Hi everybody, this is Stefan Molyneux from Freedom Aid Radio.
	This is a mental landscape map of the world that you're living in and the fiery waterfall of doom that without the strongest-willed philosophical resistance we are inevitably going to fall over.
	But first, I would like to take you back to junior high school.
	I know, I know, it's tough and traumatic.
	Except for you jocks!
	But I'm going to take you back to junior high school.
	Now in junior high school you spent a lot of time learning stuff.
	You learned about little bits of inconsequential history about your country.
	You probably learned how a bill becomes a law if you watch television.
	You learned about the opposite angle theorem and the triangle inequality Relation and other geometric stuff and you learned a lot of stuff which you never used again and which was really boring and designed to have you space out and surf your hormones to the closest attractive shape of the opposite and or same gender depending on your preference.
	Now they had you for 12 years.
	12 years the government had you and they didn't give you the next Say 10 or 15 seconds.
	I just want you to imagine if the next 10 or 15 seconds had been...
	dropped into your education.
	Let's just have a look at this, shall we?
	Okay.
	Four apples.
	There are four apples there.
	And there are four dollar coins.
	So if this is your total economy, you've got four apples and four dollar coins, each apple is going to cost a dollar.
	Each apple is going to cost a dollar.
	Ah, but let's say we can magically transform Four coins into eight coins.
	How much is each apple going to cost?
	That's right!
	You win the giant exposure of child-eating democracy known as the modern Western system.
	Each apple is now going to cost two dollars and that's inflation.
	Inflation is an increase in the supply of money relative to the amount of goods and services in the economy.
	And this is 10 or 15 seconds that could have been dropped anywhere.
	Just drop it in a little bit.
	Bungee in, bungee out.
	But of course the whole point of government education is to keep those 10 or 15 seconds as far away from you as humanly possible.
	The fact that government can create money out of thin air is what drives inflation.
	Inflation is the increase in the money supply.
	The resulting price increases are merely an effect of the inflation.
	And this is very important to understand.
	This is what inflation is.
	Why do governments do it?
	Well, because there's a time delay, right?
	So if you increase the money supply, The people who are closest to power, who get the money first, they can spend it at its original value.
	But as it ripples through the economy, those at the end of the economic chain, right, the poor, those on fixed incomes, the elderly, the people who can least afford it, get hit with inflation the most.
	So if you create an extra million dollars, the first guy to spend that million dollars spends it at the old value.
	It's worth actually a million dollars.
	By the time it trickles out, each one of those dollars is only worth 80 cents or 70 cents, depending on how much the general economy is worth.
	So the people at the beginning, the people at the front of the queue, get to make a huge amount of money.
	These are financial services industries, those close to the corridors of power, those donors to political parties.
	Not you, not me, it never is almost, and that's why the government does it.
	They print money, they give it out, and the people who spend it first get a huge amount of money, and then the people at the end get really shafted But they're poor, you see?
	So apparently, what do they matter?
	Before we get into the euro, we need to dip into interest.
	It's actually more interesting than you'd think.
	So let's just say, why would you borrow?
	Well, stuff now is better than stuff later.
	So let's say you have a job currently at 20k, but you can walk or take the bus there.
	Somebody offers you a job at 40k a year, but you're going to need a car.
	So you buy a car for $5,000 and you borrow $5,000 to get the $40,000 job.
	You don't have $5,000, you borrow $5,000 to get the $40,000 job.
	And you pay back the $5,100 or whatever it's going to be in terms of interest from the extra $20,000 that you're making a year.
	So that is an investment in something that's going to make you money and that is a Good thing, right?
	I mean, if you buy a house, then you're not renting or living in the 5k car, and that can either increase in value or give you some sort of asset at the end.
	So, that's interest.
	That's a win!
	And that's a reasonable thing to do.
	On the other hand, If you just buy a great pair of kicks like some real funky sneakers and they don't help you win a gold medal, then you've just taken that money.
	And there's nothing wrong with that.
	It's just not an investment in the way that buying a car to get a better job would be.
	Now, remember, interest is the price of money.
	Money is just a commodity.
	It's not anything weird or funky.
	It's just a commodity, like anything else.
	And when you buy something, it has a price.
	And when you buy money, in other words, you are borrowing money, it has a price.
	And that price is called interest.
	Now, interest has to account for inflation, right?
	Because if interest is about 5% a year, inflation is running at 5% a year, then interest has to be 10% a year.
	Otherwise, you're giving money away for free.
	Which is not going to happen a huge amount.
	So the important thing to understand is inflation drives interest rates up.
	Now, of course, when interest rates go up, that's supposed to slow people down from borrowing, right?
	So there's money that you're kind of spending and using, and then there's money in the bank.
	That's generally called capital or whatever you want.
	It's the accumulated savings of a country.
	Those savings, if there's too many savings, then there's an excess of money to be borrowed.
	And that drives the price of interest down, which encourages people to borrow.
	And again, the borrowing can be for fun things.
	It can be for vacations, which are fine too.
	A lot of life's happiness is made up of the memories that you accumulate, you know, brick by golden brick.
	That's how you build your Sky High mural of human joy.
	And so when there's a lot of money being saved, interest rates are going to go down because there's an oversupply of money to be borrowed.
	And then when people borrow a lot, money becomes scarcer, the interest rates go up So it's supposed to give all these signals to everyone about how much saving is going on.
	When people are saving, you want to invest in growing your business so that when people stop saving, as they inevitably do, then you're ready with increased productivity and so on.
	So it's supposed to slow down borrowing.
	And so more savings, as we said, lower interest rates.
	But if you encourage people to save, Well, that's good for the next politician, right?
	Because it takes a while for the savings to be translated into lending to entrepreneurs to improve their capital equipment or upgrade or whatever, buy and build new plants.
	Well, that is going to benefit people a couple of years from now, whereas if you encourage consumption in the here and now, you are slowing down productivity growth years down the road, but you're increasing economic activity now, and so that gets you re-elected.
	So if you are the government, then you want to print money or create money out of nothing so you can give people the illusion that the government can give you something for free.
	But that drives up interest rates.
	So the more you borrow, the more you have to crush down interest rates.
	Because if you have a big debt and the interest rates go up, it becomes more expensive sometimes to service that debt.
	So the moment you give governments the power to create money, they will inevitably take the power to control interest rates to hide the inflation that is occurring.
	Lower interest rates.
	When the government's crushed down interest rates, it means that people aren't getting anything from their savings accounts, which means they're encouraged to put money in the stock market, which creates something I call the supercharged stock market.
	You know, all of the money that you put into your retirement fund or whatever has to go into the stock market to avoid being taxed and so on.
	So, huge amounts of money charging around, trying to find too few profits in the stock market creates the bubbles.
	Lower interest rates, of course, encourage people to borrow.
	The number one thing that people borrow for is to build or to buy houses.
	So when you lower interest rates to control what the government is paying in debt,
	Next thing you know, you've got a housing boom followed by a bust, and it gives fake saving signals because it tells entrepreneurs, oh look, people are saving because interest rates are low, which means there's an excess of capital to borrow, so they borrow thinking people are going to start spending soon, but because the government's been screwing up the signals of interest rates by lowering them artificially, you end up with this economic boom and bust, because capitalists invest in upgrading their plants and machinery and equipment, hiring new people, training them, and then that demand
	Never shows up and so there's a collapse.
	Now this is also why you hear the term gold bug or people who like the gold standard because gold is something that holds remarkably stable in value.
	So let me give you an example.
	An ounce of gold in 1967 was $35.
	And that's exactly what a nice suit costs from Eaton's, which was a prominent Canadian retailer at the time.
	Now, in 1975, gold was $100 an ounce, and that was exactly the price of a decent suit from Eaton's the same year.
	The price of gold is Canadian, soared to $950, which was the price of a decent suit made by tailors in the same 12-month period.
	People have also done studies where they figure out what was the price of a decent dinner at a decent restaurant.
	And that's exactly the way it was.
	What you would pay in terms of gold has held steady for over a couple of hundred years.
	Another example is silver, of course.
	In 1964, there was silver in U.S.
	quarters.
	The minimum wage was 5 silver U.S.
	quarters.
	In 2015, 5 silver U.S.
	minimum wage was five silver US quarters.
	In 2015, five silver US quarters was worth $15.15.
	And so if the minimum wage had kept pace In other words, if the value had remained constant, the minimum wage would be over $15 at the moment.
	In other words, it's not the minimum wage that needs to be fixed.
	It's the money that needs to be fixed.
	In 1964, one quarter could buy a gallon of gas in roughly Contemporary currency, a 1964 quarter with its silver content is worth over three dollars and can still buy a gallon of gas.
	So if you look at things through the lens of gold rather than through the lens of government-created paper money, then prices remain remarkably constant.
	But of course People don't like that.
	Politicians don't like being restrained by the gold standard, which is why the whole goal has been to get off the gold standard as quickly as possible.
	So, we just briefly went through inflation and interest and restrictions on the growth of government money, which is used to bribe you and me and everyone else in a democracy.
	With that background in place, thank you for your patience.
	Let's dive into the truth about the euro.
	In many ways, the history of governments is really a tale of currency and fraud, not necessarily in that order.
	So when currencies are not tied to something scarce, like a bitcoin or gold or some sort of basket of commodities, or further restrained from some kind of monetary expansion, they can quickly lose their value.
	A good example, you've probably heard of, Weimar Republic, which is modern-day Germany, between June 1921 and January 1924.
	So, because America entered World War I in 1917, the American strength created an overwhelming advantage for the Allies in World War I.
	And they were only able to impose the crushing Treaty of Versailles with its unbelievably massive reparations that were going to go on until the 1980s and so on and cripple the German economy.
	They were only able to achieve this crushing victory and impose these very, very harsh terms on Germany because America entered the war.
	It also created the Soviet Empire, as I've talked about, and others.
	So the two great disasters of the 20th century, the First World War, of course, Second World War, and the creation of communism, expansion of communism, can fairly directly be tied to America's decision to enter into World War I on the side of the Allies.
	Germany couldn't pay back these reparations.
	Of course, there was also the Spanish flu epidemic, which killed millions of people.
	As all of the troops came back from the front, they carried this disease back to the homelands.
	So it was a bad time for most of the economies, of course.
	And of course, all of the vets needed a lot of care and attention and money, as did their widows and so on.
	So they were trying to pay back these reparations, they started printing money to pay off the reparations.
	So Germany's, the value of the German mark plummeted like crazy.
	During the first half of 1922, the mark stabilized at about 320 marks per US dollar.
	Less than a year later, the U.S. dollar was worth, here I go, 4,210,500000000000000.
	Yes, worst porn soundtrack ever.
	Marks.
	So, quite a lot.
	Germany, of course, knows the dangerous lessons of currency devaluations through hard-won and bitter experiences.
	This is when you had to take a wheelbarrow of money to go buy a loaf of bread, when it was cheaper to burn the money than it was to spend the money to buy wood to burn.
	Just a complete mess.
	I actually read a story of a guy.
	He put his money, saved up his money his whole life, put it into an annuity so that when he retired he could get that money every year.
	He cashed out his whole annuity and it was barely enough to buy a cup of coffee at a cafe across the street.
	So it shreds the middle class, opens up a power vacuum in society.
	People then clamor for a brutal leader.
	Bingo, bingo, bongo.
	You have a fine little Austrian with a mustache leading the world down the path of perdition.
	So imagine you've got a fixed income, you've got a pension, such currency devaluations go on.
	What happens?
	What happens to your contracts that go multi-years into the future?
	Real estate contracts, rental contracts, it is just basically dropping a financial nuclear bomb in an economy and it destroys people's capacity to plan and execute.
	So let's have a look at how this ran.
	1913, we are going Quite high German mark per US dollar from 4.2 to the 4,210,500,000,000 marks.
	So it's about a quintillion billion jillion to one, or as my daughter would say, her highest number just before Googleplex is a dillion quill.
	So it's a dillion quill more that it lost its value.
	So that is what the Germans had experienced in the past, which explains the Euro in ways that we'll get to in a sec.
	So, governments like to devalue currency because they get into a whole bunch of debt.
	And if you can print money to pay off the debt, it's called a soft default.
	I mean, you're really not paying off the debt.
	You're just giving people devalued money.
	It allows them to bribe people with stuff in the present.
	Like, if the government says, I'm going to give you $1,000 worth of benefits, but I'm going to have to tax you $2,000 to provide them, the scam is really clear, right?
	But if the government can say, well, I'm going to give you $1,000 worth of benefits, and then they print all this money, they give the benefits immediately, it takes 12 to 18 months for the inflation to hit the economy, and it hits it in very diffuse ways.
	Plus, people can blame the shopkeepers and the malls or whatever for the higher prices, and the politicians can say, we're going to investigate these high prices by looking in the mirror.
	Well, it's great for the politicians.
	It's great for those close to the seats of power.
	And this increasing creation of money is one of the reasons why there's an increasing wage disparity and income disparity in the West.
	to So, they buy votes, right?
	Remember, it's illegal to bribe a politician, but it's basically politics to bribe the voters.
	And they pass the bill down the road to the next generation.
	It's secure.
	Their power enriches their friends' bank accounts on the tab of the unborn, who aren't around to say, Nomas!
	No more!
	Stop!
	This umbilical is feeding me poison!
	And so, by inflating the money supply, politicians win out, people close to politicians win out, the next generation of the poor lose out.
	It has disastrous long-term consequences.
	But one of the ways that you can tell whether a currency is... It's sort of not clear, and we're talking more about a free market situation.
	There's lots of financial fun jiggery that goes on at the moment.
	But exchange rates between competing currencies is one of the ways you can tell that a currency is being devalued.
	So as we saw, the market just collapsed in value relative to the U.S.
	dollar from 1922 to 1923, which is how people knew it was being overprinted, overcreated.
	So if you expand your country's money supply quicker than other countries, then your currency's exchange rate value will drop, right?
	So, again, all other things being equal, and I get that there's lots of subtlety here, but the principles remain the same.
	You know, something falls even if it's windy, right?
	So if the French franc, if they produce twice as many French francs as Germany produces the Deutschmark, then the French franc will fall in value about 50% relative to the Deutschmark.
	Again, lots of vagaries, but that's the basic idea.
	Now, when the value of your currency drops relative to your neighbor's currency, your imports and exports go nuts, right?
	Because it takes a lot more French francs if they devalue it to buy German goods in the Deutsche Mark, and so you can't really import things from Germany anymore.
	On the other hand, the Germans can buy a whole bunch of your stuff, so it just creates real chaos in the import-export market.
	And this legal counterfeiting called fiat currency is exposed, right?
	This is the alarm that goes on and the spotlights that go on when the crime is underway.
	There's a reason they call them cat burglars, and it's not because their pee stains your couch from here to eternity with the smell that's pretty much Satan's armpit after a good workout.
	The reason they do cat burglars, they go in stealthy.
	They don't want to be caught.
	They don't want to be seen.
	In like a ghost, if they're out, if they're moving around like the wind.
	And so anything which pops a bright light on the criminality of government manipulation of currency is not particularly liked by those governments.
	So in World War II, so World War I, a lot of Western countries went off the gold standard because they didn't have enough gold to pay for World War I, with its 10 million dead and endless stalemated Western Front battlefields and Eastern Front.
	And so rather than end the war, they decided to kill the gold standard in many ways.
	And then that happened in successive ways throughout the 20th century.
	So towards the end of World War II, Western leaders, they tried to solve this issue of wildly fluctuating exchange rates by pegging their country's currencies to the dollar, to the US dollar.
	And they tried to replicate the kind of fixed exchange rates they had in the centuries prior to World War I.
	When the currencies were backed by gold.
	Gold produced a significant limitation on a government's capacity to create money out of nothing.
	So the dollar, the U.S.
	dollar, was pegged to gold and was guaranteed to be worth 1 35th of an ounce of gold.
	And then the Europeans glommed onto the U.S.
	dollar, having a kind of second, once-removed gold standard, I guess you could say.
	The planners of this system also established the International Monetary Fund and also provided some lyrics for Bruce Coburn, which was supposed to loan money pooled through member quotas to countries which had incurred balance of payment deficits.
	In other words, they had more imports than exports through inflation or other unsound economic policies.
	In short, they created a giant welfare system for world economies.
	Member countries could now inflate their money supplies and wreak havoc on their economies without suffering the consequences of such decisions, making the whole system like a ticking and inflating time bomb.
	Now, also, since the value of their currencies was pegged to the dollar, everyone depended on the economic policies of America.
	Of course, while the system was inherently unstable, American fiscal policies accelerated its collapse.
	The U.S.
	government inflated its money supply to, quote, pay for the warfare welfare state, Lyndon Johnson's Great Society welfare programs, as well as the Vietnam War and the general hyper-militarization of America after the Second World War.
	To fight the Cold War and to resist socialism, Obamacare worked out really well.
	So, If people have their taxes raised immediately to pay for the supposed charity for the poor then they can compare those tax increases to how efficient private charities have been to the poor and say well the government comes with ridiculous overhead and like more than three quarters of the money that you pay into the welfare state to help the poor gets soaked up by loathsome spotty behind toad squatting government bureaucrats rather than actually getting into the hands of the poor
	Whereas, of course, for most charities, 90% of the money, 80% of the money or more goes to the poor.
	In government it's quite reversed in many ways.
	Most of the money goes to the bureaucrats and not to the poor.
	So if the government raises taxes to pay for the welfare state right away, then the relative massive efficiencies of private charity become immediately visible and nobody wants the welfare state.
	If they go into debt, print money, and all that, in order to pay for the welfare state, then hey!
	I don't know why we didn't do this before!
	This is great!
	We can have all of our money, no increases in taxes, and massive amounts of money going to the poor!
	That's great!
	Plus the Vietnam War, right?
	I mean, if you bill people for the war, suddenly, if billed are the warmongers, suddenly it's blessed are the peacemakers.
	So the dollar began to lose value, And so the Bretton Woods member countries began to drain the U.S.
	reserves by exchanging their dollars for gold.
	Right?
	So they could go and exchange their U.S.
	dollars to get gold.
	And as the U.S.
	began to print more and more and more money, they were like, whoa, let's cash in our U.S.
	dollars.
	So by 1971, the U.S.
	had only $2.23 worth of gold to redeem every $100 worth of paper promises.
	And so instead of declaring bankruptcy, Which would be the reality.
	President Richard Nixon did what most world leaders had done in the early 20th century.
	He took America off the gold standard and put an end to this Bretton Woods system.
	And what that meant was that the last restraint for massive government overspending was taken away.
	And this has been the cocaine madness that we have been on ever since.
	So now that there was not even a pretense of constraints in place, European banks continued their inflationary ways and devalued their respective currencies.
	But not all countries inflated their currencies at the same pace.
	And so the aforementioned smoking gun, the spotlight on the crime of the legal counterfeiting of fiat currency became visible once more.
	And that's not good.
	So the broad exchange rate fluctuations that occurred damaged trade relations.
	They're hard to buy and sell when you don't know what the price of currency is going to be in a month or even a week.
	That hurts labor and employment, right?
	Because people are afraid to hire if they don't know what's happening next, right?
	And this increased the cost of welfare and decreased tax revenues, increased the cost of unemployment, payouts as people began to get fired because nobody knew what the hell was going on next.
	So fewer people working, more people requiring government assistance, more money going out than coming in, more government debt, more currency devaluation, and a decrease in saving rates.
	And saving rates contribute to worker productivity in the next generation or half generation.
	And it's like storing your seed crop, right?
	The crop that you store over the winter to plant in the spring.
	You can't eat that stuff otherwise you're gonna starve for sure.
	But not a big... not a big...
	Focus for politicians just trying to get elected in the next year or two.
	So this is a completely vicious cycle.
	More instability leads to more unemployment.
	So printing money leads to more instability, leads to more unemployment, leads to lower taxes, leads to need more money to print, creates more instability.
	You get how this works, right?
	So, this is a problem.
	What should we do?
	Well, of course, any sane human being, by which I mean anyone on the opposite dimension of political practicality, They don't cut any of the rampant government spending and they don't stop stealing from the unborn through government debt.
	And so what do they try and fix?
	The cause of the problem?
	No, they try and fix the symptom of the problem.
	So they try to figure out how to stop these fluctuating exchange rates which are destabilizing their economies.
	So afterwards, the collapse of the Bretton Woods system, the peg to the U.S.
	dollar system in the early 1970s, there were kind of these informal attempts to keep European exchange rates within 2.25 percentage bands relative to the U.S.
	dollar, which is of course at this point another fiat currency.
	So pegging your currency to the U.S.
	dollar made some weird tiny bit of sense when the U.S.
	dollar was pegged to gold.
	When the US dollar went off the gold standard, you were just pegging yourself to another random fiat currency.
	So this was formalized with the establishment of the European Monetary System, EMS, in 1979.
	Shockingly, this government program to create stability did not work.
	You know, it's an important thing to remember.
	It's an important thing to remember.
	Politicians don't sort of wake up every morning and say, hey, how can I make the lives of the people who voted for me better and more stable and more enriched?
	They just wake up saying, well, how can I get enough people to kiss my ring to maintain political power in the next 6 to 12 to 18 months?
	That's all.
	That's all it's about.
	And so why did they want The euro to begin with.
	Why did they want the European Union to begin with?
	Is it because all politicians just really want stability and restraint?
	No.
	They just want to hide their crimes in jargon.
	That's really the entire political science degree.
	How to hide crimes with jargon.
	It's all it is.
	It's all it needs to be on that diploma.
	Now there was no mandatory obligation for the various central banks to cooperate with keeping interest rates narrowed down.
	And the Bundesbank, which is the German central bank, often didn't.
	And there was different attitudes on government spending and currency devaluation between the countries.
	This led to increased fluctuation.
	See, everybody thinks that without the government, without antitrust laws and so on, there's going to be this collusion among businesses.
	It never works.
	The reason why businesses want the government to enforce prices and prevent competition is because agreements between competitors never work out.
	Because the more you float up the price of something, the more incentive there is for someone to break ranks and sell secretly and corner the market.
	So these kinds of trade collusions, they never work in a free market for very long and they always harm those who stick to it the most and reward those who break them the first.
	And so they always want the government to enforce these monopolies.
	So this forced obligation would have been a race to the bottom.
	So the highest inflating country would drive all the other member countries to follow suit, right?
	So that wouldn't have worked out at all.
	It also would have led to a redistribution of wealth from the countries with the slower inflating central banks, the more responsible countries who weren't just printing money like crazy, to the ones who were, you know, counterfeiting like pumping out money like a Volkswagen in a circus pumps out clams, right?
	Just boom, boom, boom.
	So It takes a while for markets to react to the increased amount of currency chasing the same amount of goods and services.
	There's a reason why the Federal Reserve of the U.S.
	stopped telling anyone how much money it was creating.
	People are getting wise to this.
	Certainly people in financial circles are getting wise to this.
	If you force countries to keep their interest rates close to each other, then the countries that Printed first would drive up the interest rates but enjoy all of that increased value before the interest rates hit.
	The countries who had the interest rates rise last would lose out, so it's just a complete mess.
	So fixed exchange rates are impossible to guarantee with fiat currencies when participating central banks operate independently from each other.
	This disparity shows the crimes being committed in currency, so they don't want this disparity to show up.
	So let's look at the German Reichsmark to the US dollar.
	So Germany's central bank was the most conservative when it came to monetary expansion because they had the memory of the Weimar Republic and the hyperinflation of the 1920s.
	It's one of the reasons why Greeks don't pay their taxes because they basically, the Turks ruled them for 400 years.
	They had a US-backed military dictatorship until 1974.
	They're just not that keen on the government as a whole and they view it as kind of a state of nature.
	Most Germans lost all their savings twice within a single generation.
	Hyperinflation in 1923, and the currency reform in 1948, where the old currency was abolished, a new currency came in place, the exchange rate wasn't that great.
	We've got more on this, on the truth about the German economy.
	We'll put a link to that below.
	So, for the Germans, it's like, fool me once, shame on you.
	Fool me twice, shame on me.
	Fool me three times, well, I guess we'll get another Bush in office.
	The Bundesbank was viewed as uncooperative by other European countries for not keeping pace with their monetary expansion.
	This led to the Deutsche Mark becoming the strongest currency in Europe and one of the most respected currencies around the world.
	Now, just because one person is falling a little slower, If 10 people get pushed out of a plane, one of them's falling a little slower.
	It doesn't mean that they're flying or still in the plane.
	It just means they're going to hit the ground later.
	So when we are comparing general European currencies with the German Deutschmark, well, the Deutschmark is stronger.
	But as we'll see as we go forward, yeah, it's still a fiat currency and it's still full of amazing amounts of fail.
	Karl-Otto Paul, the Bundesbank president from 1979 to 1991 said, The Bundesbank turned the original concept of the European monetary system on its head by making the strongest currency the yardstick for the system.
	That's the currency by which other currencies get measured and are often found wanting.
	The Bundesbank's stubbornness served to expose the smoking gun of other countries' weak currencies and limited their ability to expand their monetary supply.
	You start printing money and your franc gets devalued relative to the German currency, so you've got a huge head-on for the German currency.
	So let's look at inflation.
	From 1970, these are the various countries, sorry to those just listening to this on audio, I'm not going to describe the curves of the lines, let's just say Germany has had relatively low inflation, only 200% since 1970.
	Yes!
	That's what we call success in a fiat currency system.
	Like the British pound sterling I think has been running for 400 years and has only lost about 98% of its value, so yay!
	U.S.
	dollar, 1913 was the creation of the Federal Reserve, has lost 97% of its value in just over 100 years.
	Just shocking.
	So there's widely divergent monetary printing policies.
	Remember, inflation, it shows up in the price change of goods and services, but it actually refers to money supply.
	This is a rough proxy for how much money is being created by these countries.
	You can see that Italy and Spain are just creating money the way my forehead creates freckles.
	I mean, it's just crazy, right?
	And the US and Germany, relatively less mad money creation.
	France and the United Kingdom, well, it's not uh... it's not pretty and so as you can see when these diverged and these uh... this is devaluation of these higher graft currencies relative to the lower graft currencies because the higher graft currencies can buy less than the lower graft currencies so as you can see as these began to diverge in the seventies people got really upset and uh... rather than of course try and
	Emulate Germany, they decided to become parasites of Germany, right?
	I mean, a leech doesn't say, well, I'd really like to get some meals, so what I should do is evolve into a human being and go to Swiss Chalet.
	What it says is, I think I should attach myself to that human being and drink its blood.
	And that's really the approach.
	Vampire leech economies fastened themselves onto the jugular of Germany, and that was it.
	Let's look at these currencies versus gold.
	Oh, the horror!
	The horror from 1961.
	This is the French franc, the Deutschmark, the Spanish peseta, the Greek drachma, Italian lira, the US dollar, as you can see.
	Oh, what's the highest mountain of doom in this graph?
	Greece.
	Well, I guess when you give 97% of people's salaries to their retirement, and you have pretty much the lowest retirement age in the world, That's not good.
	1960 to 1999.
	These are currencies versus gold.
	And as you can see, again, in the 70s you see this divergence.
	And it has something to do with the further south you go, the more distortion, reality distortion, feel the economies.
	The larger the bugs, the more fiat currency you're probably going to get produced.
	The older the climate, the more stable your economy needs to be because people aren't there for the sun.
	The larger the bugs, right?
	This is the bug to fiat currency ratio.
	The larger the bugs, the more fiat currency you're probably going to get produced.
	I'm going to work on that graph when I lose my mind.
	So this is the percent increase since 1960.
	As you can see, right, the...
	Currencies versus gold?
	Not bad, right?
	Again, you see the US dollar and the Deutschmark down at the bottom.
	Greek drachma, again, climbing up to the stratosphere.
	If we get to Pluto, we'll find more money.
	Pluto must be made of gold.
	We'll go and mine it.
	It's going to cost us something, but we'll get there, and I'm sure we'll get back with all that gold.
	And this is, of course, the problem.
	Masking this is very, very important, right?
	So the countries who are doing worse relative to the Deutschmark are the countries that are going to want to fasten themselves onto the Deutschmark.
	The German Consumer Price Index, right, so this is, as I've said, if you're falling a little slower, it doesn't mean you're flying.
	So this is the best performing fiat currency in Europe.
	The best performing, number one, A-plus gold standard fiat currency lost 73% of its value from 1955 to 1998.
	From 1955 to 1998.
	its value from 1955 to 1998.
	From 1955 to 1998.
	Shocking.
	This is the strong, rock solid German Deutschmark It loses three quarters of its value in only 43 years!
	This is the best-performing one!
	Can you imagine trying to run a business in these kinds of situations?
	I mean, I was an entrepreneur for about 15 years in the software industry.
	And we, a company that I co-founded and we grew to a fairly respectable size, we did business between Canada and America.
	And the fluctuation in currency rates was just shocking and astounding.
	Up and down and round and round.
	It's just, you're being blindfolded and, you know, dropped into a rolling barrel of doom with Floyd Meriwether on steroids and cocaine.
	It just is really, really disorienting and it's very, very hard to plan.
	So.
	The notion of like one, one ring, one single European currency is the fantasy of every power-hungry politician in Europe.
	Outside of Germany to some degree.
	With a single currency there's no Bundesbank to restrain currency inflation across Europe.
	Nothing to compare yourself to.
	Political power, wealth distribution and government debts could be increased without the public smoking gun of exchange rate fluctuations.
	Jacques Delors, a socialist French economist, I guess those words could hang together in an insane universe, and president of the European Commission as of January 1985, took action to realize the dreams for a single European currency in April 1989.
	They actually found him in a deep cave eating fish and a goblin child.
	The introduction of the Euro was economically disadvantageous for Germany.
	Why?
	Hey, Germany, you feel like tying your fortunes to Italy and Greece?
	No, I don't.
	Why?
	Italy, Spain, France, other European countries inflated their currencies like crazy.
	They wanted it, yeah.
	You have blood.
	We're vampires.
	We're for the eating.
	What was in it for Germany?
	The polling of the German citizens.
	Up to 70% wanted to keep the Deutsche Mark and avoid the implementation of a single European currency.
	Opposition to the move was so strong that the German government launched a 17 million Deutsche Mark advertising campaign which claimed that the Euro would be a staple as the Deutsche Mark.
	The German people were strongly against the idea, but why was there such a strong movement within the German political class to subvert their will?
	Don't you love it when the government steals money from you in order to propagandize you that stealing money from you in the future would be fantastic?
	Why?
	Why did the Germans want it?
	Okay, so this latest push for the creation, this goes back to the Treaty of Rome in the 50s, the creation of the Euro coincided with the collapse of the East German communist regime and the fall of the Berlin Wall.
	West German Chancellor Helmut Kohl saw this as an opportunity to cement his political legacy and become the person responsible for the reunification of Germany.
	The German constitution also contained a mandate to pursue German unity but in the realm of international politics this was not An easy task.
	Now, it's important to remember, I mean, Germany is people, and the people had been separated.
	In Berlin, of course, there was the East and West, and East and West Germany as a whole, these are families separated, childhood friends separated, extended relatives separated.
	It was really brutal.
	I mean, it wasn't just reunification of a country, who cares, but it was people who could actually reunite.
	The US, Great Britain and France still had troops stationed in Western Germany.
	The Soviet Union had forces, of course, in Eastern Germany.
	So if these countries didn't agree, they all were way stronger than Germany militarily, reunification would not have been possible.
	A unified Germany would have the highest population of any European nation.
	Also, of course, very strategic location in Central Europe, viewed as an economic superpower with the strength of the Deutschmark.
	What incentive was there for these four countries to approve reunification, withdraw their troops, or at least allow Germany to do that?
	The treaty on the final settlement with respect to Germany was signed on September 12th, 1990.
	This treaty restored full German sovereignty and, in exchange, Number one, Germany paid the Soviet Union 21 billion Deutschmarks for removing its troops from East Germany.
	Germany reduced the size of its combined armed forces to less than 370,000 personnel, which is the military equivalent to 12 billion French personnel.
	Germany reaffirmed its renunciation of the manufactured possession of and control over nuclear, biological, and chemical weapons.
	No foreign armed forces, nuclear weapons, or the carriers for nuclear weapons would be stationed or deployed in six states, the area of Berlin and the former East Germany, making them a permanent nuclear weapon-free zone.
	Germany also agreed to use military force only in accordance with the United Nations Charter, German confirmation of the by now internationally recognized border with Poland, and other agreements regarding official German territory to prevent future conflicts, of course.
	September 1939, Germany invaded Poland, which triggered at least Allied involvement in World War II.
	So yeah, these were the requirements, and not wildly dissimilar.
	After World War I, Germany was only allowed to have a fighting force of 100,000 and no air force and all that, but of course they walked all over that.
	The treaty, of course, wasn't the full story.
	Three weeks after the Berlin Wall came down in 1989, Horst Telchik, the chief foreign policy advisor of Chancellor Helmut Kohl, noted that, quote, the German federal government was now in a position that it had to accept practically any French initiative for Europe.
	And it did, completely defying the will of the German people.
	Richard von Weizsäcker, former president of West Germany, infamously said the euro would be, quote, nothing else than the price of the reunification.
	So why did Germany accept the euro?
	Because other countries were holding Germans hostage from reunification with each other.
	Former Bundesbank president Karl-Otto Pol, quote, European Monetary Union may not have come about had it not been for Germany's reunification.
	Karl knew that he had to promote European interests in order to make reunification acceptable, said former Mitterrand advisor Hubert Vertrin.
	Mitterrand did not want reunification without advances towards greater European integration, Vertrin noted, and the currency was the only topic that was open to debate.
	I imagine it sort of went a little something like this.
	Ah, Germans, welcome!
	Come in, sit down!
	We have many things to discuss, eh?
	Going back, I would say, to World War I, where pretty much you turned France, our beloved country, into the moon, with the shells, the mustard gas, unexploded bombs, and the multi-year disassembly of our young men.
	So, then, in World War II, we showed a lot of friends behind, we ran from the panzers, This is not looking very good for us.
	We went from Napoleon to conquer Europe to running away from the Germans.
	And this was not very good for us.
	It was so bad that we had to eliminate the idea of virtue, truth, reality, logic, reason.
	We got the postmodernism because we were ashamed from running.
	From the Germans that we get rid of reality, post-modernism, Jacques Derrida, and others disassembled the brain as you disassembled our French youth in the 1914 war.
	The result of this is that we cannot reason with the French voters.
	They are galetoises and barrets and baguettes and cafés and no work, and you can't reason with them at all.
	We are frustrated.
	But, you know, we French like to see both sides of the thing.
	We are frustrated.
	We are also monstrously relieved because when people let go, like a child with a helium balloon in a race, they let go of rationality, then they become bribable.
	This is a word.
	Bribable.
	But it's tough to bribe the voters with their own money because we take the cut and we give them the dregs, the detritus, the scraps.
	Ah yes, that's the word.
	So, we have a problem.
	People are too stupid, too postmodern to think with any clarity.
	But we need to order them around, and so we have to bribe them.
	Now, here's where we get to the important crux of the matter.
	Which is that we bribe them with the French franc.
	No longer boxed in.
	Is that how you say it?
	Boxed?
	Surrounded?
	Caged!
	Caged with gold standards.
	And so we can make as much as we like and bribe them with this paper.
	Paper!
	They think paper is money and paper is not.
	But, you know, postmodernism, up is down, black is white, paper is money.
	Now, unfortunately for you, because we have troops in your country now, unfortunately for you, the Bundesbank, the Bundesbank that you have makes our currency look like the asswipe, asswipe paper.
	Your panzers make our soldiers look like headless chickens running around.
	It's bad.
	but your currency makes our currency look like crap.
	So this is not good for us.
	We cannot reason with our voters.
	We must bribe them.
	We cannot bribe them with their own money.
	We must create the money, but your not creating money makes our creating money look terrible.
	Terrible.
	So now we can come to an arrangement.
	N'est-ce pas?
	We can say that you are subject to our power.
	We have the soldiers in your country.
	Unlike in the World War I where you had the soldiers in our country.
	And you must now help us bribe the French voters with the ass-wipe paper.
	Money.
	Post-mortem money called fiat.
	You will also be able to bribe your voters with money so you can get good stuff out of it, too, but frankly, we don't give a merit about that.
	We only care for bribing our own voters with imagination.
	So, we have something now, finally, that you want.
	You have two Germanies, sliced down the middle, like Fruit Ninja, down the middle, separated, And you wish to join them together, to have the happy family, to have the hugs and the flowers, and the I-have-not-seen-cousin-Gunter-in-East-Germany-lo these-many-years-we-can-go-and-hug-kiss-kiss-kiss, or punch each other with beer, or whatever you Germans do?
	So you want to reunite?
	And we can allow that.
	Or not allow that.
	So!
	You will submit to this paper currency.
	You will help us to bribe our voters.
	You can bribe your own, too.
	We don't give a merd about that.
	So you must join our counterfeiting ring.
	There is no other way.
	Or you will be forever separated from your loved ones, your family, your fruit ninja up and down and all sides around.
	You must help us bribe the French voters, you must help the Italians bribe their voters, the Portuguese, the Irish, and dare I say, eventually, in a postmodern economics way, the Greeks.
	We have voters who have let go of reality, who imagine that existence precedes the essence, The existentialist, as others say, so we can make up money out of thin air.
	People think that we are giving them something.
	We are only giving them their children's kidneys, nicely wrapped and iced for dinner in the here and now.
	They have... When you let go of reason, you get the something-for-nothing gene that flourishes in the hearts and mindlessness of the people.
	And we exploit that.
	We pretend we can give them something for nothing.
	Here, it is all free!
	Any sane human being knows there's no such thing as free, but we're no longer dealing with saying we have the post-modernism, post-Marxist, post-feminist goop crap porridge, as the Scots would say.
	So, their greed to get something for nothing is our power.
	We cannot do it if you keep having a real currency.
	A currency that is limited.
	We want no limits on our power.
	So you must join with us if you wish to have your happy East or West German families join together.
	You must join with us.
	And together we say, life for power is death to reality.
	So it's really just a Mafia way of looking at things.
	Jacques Attali, former economic advisor to French President François Mitterrand, said, The common currency would not have been created without the reticence of François Mitterrand regarding German unification.
	When François Mitterrand became president of France in May 1981, French socialism!
	Have you ever heard of this before?
	He pursued significant government intervention, which saw capital flow out of the country and the franc got weaker and weaker.
	When the Bundesbank refused to lower interest rates and inflate to support a weakened franc, France had to devalue the currency relative to the Deutsche Mark.
	In a series of devaluations which ended in March 1983, the value of the French franc fell by 30% against the Deutschmark, which was a massive political embarrassment for Mitterrand.
	And, of course, catastrophic for importers and exporters.
	In a conversation with Margaret Thatcher, Mitterrand said, Without a common currency, we are all, you and we, under German rule!
	When they raise their interest rates, we have to follow.
	And you do the same, even though you do not participate in our currency system.
	We can only join in it if there is a European Central Bank where we can decide together, where we can hide our crimes.
	Remember?
	Political science is the art of hiding crimes in verbiage.
	It is reported that officials at Udyssey Palace, the office of the French President, claimed, quote, We may have the nuclear bomb, but the Germans have the Deutschmark.
	Over the years, countless statements have been made by key political figures, essentially confirming the existence of a backroom mafia-style deal.
	West German Chancellor Helmut Kohl gets the reunification of Germany, but the Deutschmark dies!
	The German political class had problems with the conservative and independent Bundesbank over the years.
	Which no doubt played into the decision-making process.
	Look, the German political class is no different from any other political class, which is that they also want to be freed from the restraints of any limited currencies.
	Before West German general election, In 1969, the Bundesbank increased interest rates, which boosted its international reputation as an anti-inflation central bank worldwide, but created massive headaches for politicians, right?
	So, in general, you can see these studies that the Fed, if it wants the government to stay in power or get into power, manipulates the currency to produce a temporary economic boom right before an election.
	Same thing here.
	They increased interest rates, And therefore brought down inflation, but that causes an economic slowdown, which is very tough for the political class.
	Throughout the 1970s, the Bundesbank had to contend with significant pressure from the political class, which wanted to make decreasing unemployment its priority over currency stability.
	Currency stability is short-term pain for long-term gain, which is the exact opposite of incentives in a democratic political system, whereas if you can get increased Employment in the here and now at the expense of crap down the road.
	Well, you get to lower the employment insurance and welfare that you pay out.
	You get more taxes in the short run.
	Who cares about the long run?
	This is politics.
	The Bundesbank also didn't want to follow the inflation rates of the United States and stopped its inflationary interventions in favor of the dollar in March of 1973.
	This decision played into the collapse of the Bretton Woods system and all the imaginable political issues which followed.
	The Bundesbank's refusal to lower interest rates impacted many more than just French President Mitterrand, and the foreign and domestic political challenges resulting from an uncooperative central bank greatly frustrated the German political class.
	Following the Backroom Deal, the only people in favor of the strong independent Deutschmark were the German people.
	Now, because it's democracy, their will prevailed.
	Can you imagine?
	No, I can't either.
	The propaganda campaign continued in Germany with claims that a central currency was necessary for maintaining peace given that Germany's central position in Europe had led to two world wars.
	I don't know.
	The fact that you have no sea access and hostile enemies in a war on either side gives you an East And West Front Problem, which pretty much decimated Germany in both the World Wars, so I don't know how being in the middle of Europe is all that great.
	Germany, well, you know, a couple hundred years of religious wars, an unerring instinct to enact the most vicious child abuse imaginable.
	Hitler, as a child, was beaten so badly he ended up in a coma.
	And the fact that the U.S.
	intervened in World War I, creating the domino effect that led to World War II.
	The fact that Germany was the first Western country to introduce, under Bismarck in the 19th century, The modern welfare state which then led to war.
	That, I think, has a little bit more to do with why Germany had two world wars rather than, say, its location in the world.
	So the self-hating German cover story was made even more laughable since Germany's military was now dwarfed completely by French and British troops and the country was still occupied by foreign troops.
	In a speech before the German Parliament, Social Democrat Günther Verhogen said, Of course, this was the last time in history that guilt for decisions not made by the current generation was used to extract resources from that generation and give it to other people.
	Anyway, let's keep moving.
	German Chancellor Helmut Schmidt later commented that without a unified currency, the financial institutions within Germany would have remained powerful, causing envy and anger from neighboring countries, which would carry with it severe political consequences.
	You see, if you don't take crack cocaine and put it into your body, the people who are will envy your teeth and health and body weight and money and job and family.
	And they might be upset, right?
	So, you see, if you quit smoking, the other people around you who are still smoking will be upset at that.
	So, keep smoking, right?
	If you study for that test, the kids who don't study for that test will feel bad.
	And they'll be upset with you.
	So, lower yourself to the lowest common denominator, because trolls can be mean.
	Other than the incredibly negative public reaction, the German political class and its push for the common currency had another problem.
	It was unconstitutional.
	Fortunately, the Constitution is a superhero made of paper, and bullets can't pierce it.
	That's why when, you know, people go to war, or police officers Go to inner cities, they wear a paper around them.
	Origamis with hats, right?
	This paper is incredible.
	It changes people's minds.
	You show them a piece of paper and their brains, like you show a religious person the word atheism and it reforms their brain and vice versa.
	So paper has this unbelievable set of magical powers so the Constitution kept this from happening.
	See, the German constitution demanded a stable currency, and you can't guarantee a stable currency in a monetary union with anybody close to the Mediterranean, or the Atlantic, or the Pacific, or each other, or mountains, or deserts, or rivers, or people, or not people.
	So, constitution versus political interest.
	The cage match of infinity.
	Who will win?
	So as is likely to happen when there are strong political forces at play, the German Constitutional Court ultimately found that the monetary union was in fact constitutional.
	But they said that Germany could and must leave the currency if it proved to be unstable because there's nothing easier than unravelling an existing law.
	Obamacare.
	I'll find something.
	I'll find an example somewhere in my head.
	So ultimately politicians simply changed the German constitution to prevent further disputes of this nature.
	See?
	Political will.
	Paper.
	Ha!
	I wonder if a piece of paper is between you and your drowning child, will you say, oh, I can't possibly get through that piece of paper.
	Rip!
	I go save my drowning child.
	The will of the people and the law of the land were not going to stand in the way of the euro becoming a reality.
	And it's weird when a fantasy becomes a reality, bad things happen.
	So the road to the Euro was fully established with the 1992 Maastricht Treaty.
	It was stipulated that from 1994 to 1998 the European Monetary Institute would be founded and participants in the Monetary Union would be selected.
	The European Monetary Institute was the forerunner to the European Central Bank, which promised a smooth transition for the introduction of the Euro.
	In order to participate in the monetary union, countries would need to meet strict guidelines, you see, from the new European Monetary Institute, including a budget deficit of less than 3% of their GDP and a debt ratio of less than 60% of their GDP.
	It also stipulated very seriously that price inflation rates and long-term interest rates would need to be under certain limits.
	See?
	Words.
	Paper.
	I don't know why we have weapons when you can have words and paper.
	Like if a guy's about to hold you up, you don't need a gun or a weapon or even fast legs.
	What you need is a little copy of the criminal code.
	You know, get him to look in and get him to look.
	Dude, this hold up, it's illegal.
	And then what will happen is his gun will turn into a flower and his heart will turn into a pixie of peace.
	It's wonderful to see.
	And this is exactly how foreign policy and military and gun control ought to be established because we've all seen this happen.
	It's very, very clear, and why would anyone want anything else?
	It was sold to the people that the new Euro would be as stable as the Deutschmark, but now applied to all the European member countries, which is of course the exact opposite of what was intended and desired.
	That is, if you're the only person not doing crack, and then you decide to do crack with everyone, I guess it could be said that you are now as stable as the other people, but it's not because they've become more stable, it's because you've become less stable.
	So, stability.
	So it was claimed that the criteria for participation would ensure stability, but the criteria were only selectively applied.
	If you want consistent rules, you go to the common law and the voluntary ostracism of the people.
	You don't go to governments.
	The whole point of governments is to create rules that the governments are not subjected to.
	With a simple majority vote, the Council of the European Union could admit countries to the Eurozone, regardless of their financial state.
	Belgium and Italy were admitted even though they'd never had public debt under 60% of GDP, even on paper, for a brief period of time, using accounting tricks like other countries.
	Several of the original member countries only met the criteria for one year, 1997, when they were approved to join.
	See, rehab means that for five minutes you don't take a drink.
	You're cured!
	No more an alcoholic!
	For five minutes you didn't take a drink!
	So you're good now.
	Fine, right?
	The support of a common monetary unit in the euro also implied that interest rates from countries would need to converge.
	If a country was expected to be allowed into the euro, highly indebted governments were able to pay lower interest rates due to the perceived stability of the upcoming new currency.
	So you've got a guy named Bob who's a complete wastrel.
	You know, he goes out, buys hookers and blow, and crashes his car, and gets sued, and just gets into massive amounts of debt.
	But he's got a really, really rich uncle who has consistently been showed to pay off his Bob's debts.
	Now, if you're going to go and lend to Bob, well, you're not going to do it, right?
	Really what you're doing is you're lending.
	To the uncle, right?
	Because the uncle is going to pay off Bob's inevitable debts and disasters and car crashes and so on.
	So this is what's really important, is that Bob definitely wants his rich uncle to underwrite his debts.
	Because nobody's going to lend to Bob.
	Interest rates of $12 billion a minute, right?
	Nobody's going to lend to Bob.
	But if his rich uncle is going to pay off his debts, he wants that going on.
	And this is basically the case with a lot of the countries versus Germany.
	If, for sure, you know that Bob is coming into a whole bunch of money next year, then you're going to be more likely to lend to him this year.
	Because he's going to say, look, man, I'm going to be 21 next year.
	That's when I get money out of the trust fund.
	I got like $2 million in a trust fund.
	All I'm asking for you is lend me $20,000.
	I'll sign the papers.
	I'm going to get the money.
	Here's the papers.
	It's coming, man.
	Give me the $20,000.
	And I got $2 million.
	I'll pay you back $22,000 next year.
	That's 10%.
	That's good.
	And this is basically the case, but with a variety of highly offensive accents, which I won't pursue right now.
	All of the people whose interest rates were crazy high because they were irresponsible, and the interest rates that were high, or rather I should say, the interest rates they had to give to offer people to buy government debt, right, to buy their bonds and so on.
	Like in Greece, they were up over 20%.
	That's supposed to slow down their spending and borrowing.
	But the moment they could hook into Germany's credit rating, they got that rich uncle who'll pay off their hookers and blow debts.
	That's not going to result in a diminishment of hookers and blow.
	Thus, countries with highly inflationary currencies were subsidized with decreased borrowing costs, which ultimately makes no economic sense.
	And countries with less inflationary currencies, like Germany, were punished by having to pay higher interest rates than they would have otherwise.
	So, Bob, the wastrel, Won't get any decent interest rates, but Bob, who's a responsible guy and has saved his money, his only irresponsibility is subsidizing Bob.
	The rich uncle is going to have to pay higher interest rates because people know that there's a random risk factor called Bob hookers and blow in the equation of his finances.
	The mere expectation that certain countries would be allowed into the euro allowed them to decrease their borrowing costs and meet the criteria to be allowed into the euro, right?
	So that's really important to understand, right?
	So nobody's going to lend to Bob, and Bob's uncle says, well, okay, but you have to control, you have to save a little bit of money in order for me to guarantee to fund you next year.
	But Bob is allowed to save a little bit of money because people know that if he saves a little bit of money, the rich uncle is going to let him, he's going to start paying off his debts.
	So the very fact that they were perceived to be able to get into the euro allowed them to meet the criteria of reduced deficits and debt to get into the euro.
	So needless to say, between the selective application availability of accounting tricks and the interest rate borrowing cost subsidy which occurred, the criteria for participation provided zero stability.
	And plus, Greece just lied and hid.
	So, what happened?
	Exactly what you would expect.
	So, this, you know, everybody crashes at the same time.
	So, as you can see, in the early 1980s there was a significant divergence in long-term interest rates, right?
	Because of a perception of inflation and so on, and Germany was lowest.
	And then when you see, this is Greece, Italy, Spain, France, Germany, Portugal, and Ireland!
	As you can see, they all begin to converge, right?
	So they all, right, I mean, Greece, as I said, is up around 24-25% in the early to mid-90s.
	It's mad.
	Spain's over 20% in 1982.
	They all, well, except for Greece, they all get down to around 5% after this unification.
	They're all converging in on Germany.
	So, this is really... I hate to say this after we've done this fairly lengthy presentation, but this is all you really need to know.
	So, the euro was introduced in 1999.
	And all of these interest rates converge.
	Then there's a European debt crisis, and all of this artificial suppression of interest rates from the irresponsible countries then blows up, and they all separate.
	Germany continues to go down in terms of its interest rates, and other countries expand again.
	So this is, you know, you can hold a helium balloon underwater for a while.
	When you let it go, it just pops up.
	And so, as you can see, the blow-up has been worse than that which was suppressed, because all of the economic needs and indicators have been suppressed, and so it's sort of like you've got a toothache, and you take morphine for your toothache, and you don't go to the dentist.
	Well, you feel a lot better immediately, but your toothache rot just gets worse and worse and worse, and by the time you do go to the dentist, you have to have, like, your jaw removed or something like that.
	And so, this is what happened.
	Everybody, the least responsible countries got the credit rating of the more responsible countries, which allowed them to go completely insane with their borrowing and spending.
	And then, when there was a debt crisis, when... And this didn't last very long.
	Didn't last very long.
	A decade, or a little less, little more, depending on how you count it.
	This is it.
	A decade.
	This is the long-term vision of our country.
	This is the debt-to-GDP by country.
	So debt-to-GDP went down, not because there was a massive amount of restraint in spending, but because debt servicing got cheaper for the countries with more debt, because it basically was assumed that the rich uncle called Germany was going to step in and pay for these things.
	And so it suppresses, and then kaboom, it goes back up in the debt crisis.
	So this is the debt-to-GDP in the Eurozone as a whole.
	So the bottom is where you were supposed to be to even get into the Euro.
	The Eurozone as a whole never got much within a spitting distance of that.
	So you had artificially lower debt payments because everyone hooked into Germany.
	And not just Germany, I'm just using that as a proxy for the more responsible countries.
	Everyone hooked into Germany's credit rating, lowered their cost of borrowing, they raised their spending like crazy, and then it went through the roof when there was a debt crisis.
	So, it was claims.
	Ah, don't worry, there's gonna be sanctions.
	Big Olga from the SS, cat-of-nine-tails, even if you're not a masochist-style punishment.
	There was a Stability and Growth Pact, which would ensure, well, I would assume stability and growth.
	In the government, all you have to do is name something and it magically happens.
	I'm hairy.
	Given that they had the most stable currency and economy in Europe, the German government requested that the Stability and Growth Pact include automatic sanctions against member countries who violated the deficit limits after the euro was introduced.
	There will be rules!
	I said French because, you know, all you have to do is read Jacques Derrida, Sartre, and go into the general kaleidoscopic LSD brain trip called postmodernism.
	You'll know how keen the French are on just plain old simple Anglo-Saxon rules.
	The French opposed this suggestion and ultimately sanctions became dependent on political decisions.
	And revenue from any sanctions would go straight to the European Union instead of any member countries impacted by the destructive financial policies.
	So... Are you ready to play Bureaucracy Musical Chairs?
	The Commission of the European Union, which is different from the Council of the European Union because of letters, would be responsible for, quote, monitoring the Stability and Growth Pact, but that simply didn't happen.
	The Chairman of the European Commission, Romano Prodi, sounds like someone you'd want to be in charge of financial responsibility, described the provisions of the Stability and Growth Pact as stupido, so you can imagine how seriously he took his obligation.
	In the event of SGP violations, the Commission would give recommendations for the Council for Economic and Financial Affairs because we are just one council short of utopian perfection!
	Echofine, which contained the finance ministers of the Eurozone countries.
	Echofine would then vote if the SGP was being violated.
	And if a qualitative majority determined that violations had occurred, they would issue a sternly worded warning to the respective country and recommendations on how to correct the problem.
	If the infringing government doesn't follow the Echofine recommendations, they receive incredibly massive fines and sanctions!
	No, because remember, all countries in the video game of economics have Command Key God Mode enabled.
	So, no, none of that happens.
	Echofine then holds another vote.
	And a two-thirds requirement is necessary to establish sanctions of any kind.
	Sanctions could include fines of up to one half of one percent of GDP.
	You know, like if you don't pay your taxes, you have to pay a half a percent of your income to the government.
	This setup amounted to allowing a group of thieves A vote to determine if thieves should be prosecuted.
	You can imagine how well this worked out in 2005, the stipulations were officially relaxed even further, despite having zero fines, ever having been issued, completely neutering an already inefficient and pointless policy.
	But words to calm the masses who imagined there could be consequences from words.
	In 2011, following the European sovereign debt crisis, it was determined that the SGP had, quote, not been implemented consistently.
	And a new policy called the Euro Plus Pact was created.
	We could continue, but I already have bureaucracy fatigue and you can already see how all of this has turned out.
	It was claimed that the independence of the European Central Bank would ensure stability.
	But if the independence of central banks created stability, then there wouldn't have been rapid currency devaluation prior to the introduction of the Euro.
	Of course, the ECB is independent on paper.
	But when I was a teenager, on paper, I was a six-foot-two paladin named Argoth.
	But much like the Federal Reserve Bank in the United States, it's a massive political game and central bankers are nominated by politicians.
	French President and noted man-whore Francois Mitterrand even once outright said that the, quote, independent European Central Bank served to execute the economic decisions of the Council of the European Union.
	So much for the illusion of independence.
	The original ECB president, quote, voluntarily stepped down in the middle of his term, passing the presidency to Jean-Claude Trichet, who previously spoke against the independence of the ECB.
	In January 2003, Trichet was in charge of the French Treasury and was put on trial regarding irregularities at Credit Lyonnais, one of France's biggest banks.
	Oh, it's okay, because he was cleared of wrongdoing in June, which allowed him to take over as president of the ECB in November.
	Well, you know, like the French, like the Greek president who was convicted of corruption and then ran again and got voted in again.
	See, if you're a convicted felon in America, you can't even own a gun.
	So, January 1st, 1997, the legal framework of the Euro and the European Central Bank were established.
	The Euro was officially introduced on January 1st, 1999.
	Exchange rates between the participating currencies were permanently fixed.
	The Euro was officially introduced into general circulation three years later on January 1st, 2002.
	Seven years later!
	Really?
	Only seven years?
	This is as long as they could make this nonsense last.
	Seven years!
	The European debt crisis began at the end of 2009 and has continued ever since.
	The origin of the euro had nothing to do with financial stability.
	It was about allowing the political class the freedom to bribe their voters.
	Buy votes, enrich their friends' pockets, create their legacy.
	You know, anytime a politician talks to you about creating his legacy, hide your children.
	I don't care if it's in a meat locker.
	Hide your money, hide your children, go underground and exchange your teeth for gold.
	Because a presidential legacy or a politician's legacy is always at the expense of at least 12 of your internal organs.
	You're going to be broken up and sold for parts, but it's okay because he has a legacy.
	This is what governments do.
	This is what politicians do.
	They win.
	You lose.
	This is the mafia, right?
	The mafia is organized crime.
	The government is disorganized crime.
	It's just that the mafia doesn't have as many PR people in the form of the left-wing press to cover their crimes in language.
	Sometimes I think this is the only reason we ever developed analogies and metaphors was to cover up crimes and dilute the outraged moral conscience with appeals to sympathy.
	Oh, but what about the poor to a desire to live in a peaceful society?
	well, you know, taxes are the prices we pay to live in a civilized society, and that our children will end up paying to live in a war-torn economic crater that formerly held a flourishing civilization.
	Political class doesn't give a damn about the people.
	They didn't introduce the euro to make your life better.
	They introduced the euro to make their lives better.
	And the basic reality is this is a seesaw.
	In a free market transaction, it is always win-win.
	If I give you a dollar for a pen, you clearly want the dollar more than you want the pen.
	I clearly want the pen more than I want the dollar.
	Win-win.
	Political class, always, always, always win-lose.
	They win, you lose.
	So stop voting for more vampires and throwing up your jugular and saying, here comes health and vitality!
	It's never going to work.
	It's never going to work.
	And for more on what will work, you can explore this channel.
	You can go to fdrpodcast.com to download podcasts.
	You can go to youtube.com slash freedomainradio for more on this.
	I've got free books on solutions at freedomainradio.com slash free.
	Please enjoy.
	Please consume.
	And if you like what you hear, you find it helpful and useful, and you would like to say enroll me in classes to do even more insulting accents, you can go to freedomainradio.com slash donate to help out the show.
	Thank you everyone so much.

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