Europe is destroying itself. It is perhaps a few years or a few months in front of us in this regard. Why has this come to pass? Well, like us, they adopted a pure fiat currency 20 or 30 years ago, then combined them into one big fiat currency, and have learned that either way credit bubbles don’t last forever. Real wealth must come from hard work, innovation, and much else that is in short supply.
They also have learned that generous welfare states and prosperity can go hand and hand for a while, but they can’t last forever. We’re learning this too. Europe was long the model of the American left, who said socialism need not be drab and totalitarian like the Soviets but rather can be vibrant and compassionate like the regimes of Sweden and the UK. Well, here we are, about to see a currency collapse. We’ve seen it elsewhere, including the former communist regimes of Eastern Europe and in Third World countries like Zimbabwe. But in Western Europe? It would have been unthinkable until recently.
Without being too selfish about things, we must consider that this may give the US a little breathing room. After all, we have our own currency and by virtue of legal tender laws can more easily print our way out of our problems. It may even be like the post World War II period where we were hugely structurally advantaged by the problems of others and their need for our goods, expertise, and money. But this won’t go on forever; after all, currencies must sometimes be exchanged, particularly when you export your manufacturing capacity and depend so greatly on imported raw materials, as the US now does. And, more important, we have come to resemble Europe more and more, have less of the manufacturing and other capacity that made the 1950s an idyll, and likely will have the same problems before long . . . or more accurately will have our current severe problems for a longer time.