The American Empire vs. the European Dream: The Failure of the Euro

By György Matolcsy

Our age is defined by many different often contradictory values and processes of which the dominance of the American Empire is the most important. Europe with its fundamentally failed euro project challenged both the political and monetary hegemon status of the Empire and attempted to create a new empire. The American Empire did not put up with a rival global currency, so it has waged all types of modern warfare to prevent this attempt. That is how the vision of a European Empire turned to be a nightmare instead of a sweet and nurturing dream.

György Matolcsy’s book – using an unconventional approach and a broad historical perspective – analyses the American Empire, the current world order, its defining features, the relations and motivations of the major players and the grand strategies that they outline. In this multi-valued world, what goals and guidelines can safely lead us towards global prosperity? Do we need to set frameworks for our national visions in the 21st century, and if so, what are our main reference points in this volatile, uncertain, complex and ambiguous world?

In order to restore the global balance of power, Europe have to give up its imperial ambitions and it has to return to its 16th century roots when European open-mindedness, cultural diversity and spiritual revolutions led to the cradle of future breakthroughs in science, technology and governance. The new global player, China also has an important role in restoring the global balance of power. The USA and China, the two world powers that complements each other in character can bring the new golden age of the global community.

By understanding these processes on individual level and as a nation, Hungary can develop new and successful strategies that incorporate eastern wisdom and western openness with which it can move closer to being one of the winners of this changing world order.

First chapter added by the author in English language.

Translators: Bence Gáspár; András Vass; Judit Várnai; Kata Vígh

 

• Language: English
• Publisher: Publishdrive
• Release date: Nov 28, 2019
• ISBN: 9786155884610

Book preview

cover.jpg

GYÖRGY MATOLCSY

The American Empire

vs.

The European Dream

The Failure of the Euro

Original title:

György Matolcsy / Amerikai Birodalom:

A jövő forgatókönyvei, 2004, 2015

Extended English edition published by

Pallas Athéné Könyvkiadó Kft.,

1014 Budapest, Úri utca 21.

www.pallasathenekiado.hu

Translation

Bence Gáspár

András Vass

Judit Várnai

Kata Vígh

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from the Publisher.

Copyright © 2019, György Matolcsy

English translation © 2019, Bence Gáspár, András Vass, Judit Várnai, Kata Vígh

Cover design © eyelab.dk

Cover photos © Shutterstock, Adobe Stock

Extended English edition of the book Amerikai Birodalom – A jövő forgatókönyvei (American Empire – Scenarios for the Future), first published in 2004.

First chapter added by the author in English language.

Elektronikus változat

Békyné Kiss Adrien

ISBN 978-615-5884-61-0

To Zita, Máté, Ádám, Richárd,

Emily, Levente and Márk

Contents

Foreword by Viktor Orbán, Prime Minister of Hungary

Acknowledgements

PART ONE

I. The Euro Failure

PART TWO

II. What Kind of an Age Do We Live In?

III. The Birth of America

IV. Mature America

V. America’s Internal Wars

VI. Imperial Heritage

VII. Pax Americana

VIII. America’s Wars

IX. Future Scenarios

Notes

Recommended Reading

References

Foreword

Dear Reader,

It may seem strange that the Governor of the Central Bank responsible for monetary policy decided to write a book about a topic other than monetary policy. What may seem even more strange is that the Prime Minister wrote a preface to this book.

But we Hungarians have always felt a kind of earthbound mundaneness in the undeniable wisdom of the proverb that the cobbler should stick to his last. The history of Hungarian political philosophy has, for hundreds of years, shown examples of government professionals taking excursions to forbidden intellectual areas. You are holding in your hands another fine example of this uncontainable, unremitting and soaring Hungarian intellect.

History often goes round and round for decades like a treading horse on its own path. And the intellect, albeit reluctantly, follows this well-trodden path. Then there are times when the flow of events suddenly accelerates, with wild and turbulent sections, and the world surrounding us turns to new avenues that the reigning scientific consensus can hardly follow, let alone predict. This is the time for forward-looking ministers, politicians, central bank governors and prime ministers to take the stage. This is when the ability to see and present current events and future prospects in a cross section is most valued. And this is no longer the domain of scientists and sciences, but that of polyhistors, reformers, philosophers and politicians. The age in which we live is a moment in our history that will hopefully shed new light on a great deal of facts experienced over long centuries, and the unique fusion of mosaic stones will produce an unprecedented and fascinating picture.

I hope you enjoy the journey!

Budapest, October 2019

ORBÁN Viktor

Acknowledgements

I would like to express my gratitude to everyone who helped me in any form create this book for the Readers, either with their thoughts, views, expertise, specific editorial remarks or the support from my family. Fifteen years have passed between the first edition of Amerikai Birodalom and this extended version, bringing important changes. In this period, I received much support for achieving our common national goal of placing Hungary on a sustainable convergence path, first as minister for the national economy and then as central bank governor. After the decades spent in shaping economic policy, I can confirm that ensuring a successful economic model requires not only the exploration of a nation’s internal resources and character but also the assessment of the external environment, therefore this publication also helps this mapping work.

In the first two decades of the 21st century, we saw fundamental political, geopolitical, economic, social and technological changes and transformations that shape our everyday lives and the future so much that it is not far-fetched to claim that the emergence of a new world order has become a real possibility. Nevertheless, when we examine human history and the rise and fall of empires, this is not unprecedented, whether in a unipolar or various multipolar systems. Whereas getting to know the new world order often requires new vantage points and maps, the thorough analysis of history continues to be one of the cornerstones in navigating this ever-changing world.

In the years following the turn of the millennium, I spent several years researching before I first attempted to explore the correlations that may have motivated the actions of the United States in the world power struggles at that time, by providing an in-depth analysis of the emergence of the United States as a global power. The identification of these experiences had far-reaching consequences not only from the perspective of the great power under review but also the world order and thus our common future. Of course, we have gained many new insights since 2004, however, the factors influencing the world order and the position of the great powers have often remained the same. In this emerging new world order, there are clear signs of Asia’s rise, while Europe lags behind in more and more respects. European nations have every opportunity to play a more central role in the world, but this will only happen if decision-makers forget imperial ambitions and focus on strengthening nations again: the key to Europe’s future is having strong nations. Europe is now at a major crossroads, and the chosen path will also determine how the world order will evolve in the future. That is why I decided to supplement my earlier work on the American empire with Europe’s opportunities, in the hope that the viewpoints and assessments in it may promote the achievement of sustainable development on the old continent.

Special thanks are due to several people for this book, whom I would like to list by name below. First, I wish to thank József Antall, the first freely elected Hungarian prime minister, serving from 1990, for everything he shared with me on the US and Europe while I briefly worked for him as a close aide. He taught me that building a bridge between the US and Europe, a bridge of transatlantic solidarity, is crucial from the perspective of Hungary’s future. At the birth of Hungarian freedom in the modern period, in the summer and autumn of 1990, I had the privilege of accompanying the prime minister to Munich, Stuttgart, Bonn, Paris and Washington, witnessing his negotiations with leading statesmen, such as German Chancellor Kohl, British Prime Minister Thatcher, French President Mitterrand, US President Bush and others and hearing him give speeches at restricted official lunches and dinners.

I am also grateful and indebted to Prime Minister József Antall for sending me to London in the summer of 1991, where, as a member of the Board of Governors of the European Bank for Reconstruction and Development, I experienced life in the City of London, the international world of finance, the British way of thinking and great powers’ political and economic efforts. These fours years I spent abroad, in one of the centres of the international world of finance and in the first half of the 1990s to boot, helped me understand Hungary better, because it gave me an opportunity to see my country not only from inside but also as an outside observer. I saw the chances offered by foreign policy when people think and act together to achieve goals that determine nations’ prosperity.

I would also like to express my gratitude to Chancellor Kohl, whom I first met in 1990, and one of his remarks stayed with me forever. The chancellor believed that the only crucial principle for Germany’s European policy and Europe’s Germany policy was that Germany should be anchored in Europe, and the goal should be to achieve a European Germany rather than a German Europe.

I am also much obliged to Prime Minister Viktor Orbán, not least because I could accompany him to his most important negotiations. I learned a lot from Viktor Orbán, for example that the world is only half given, the other half is will, and that the Hungarian nation’s interests can be advanced in the world with nothing but smart policy. I am also thankful to Viktor Orbán for letting me be a part of the overhauling of Hungarian economic policy after 2010, first as minister for the national economy and then as central bank governor, and this work has led to tangible results.

I hereby wish to thank everyone who helped me earlier in publishing Amerikai Birodalom, either by editing or proofing the manuscripts, or by helping the book achieve its final form and be published through their useful input.

Last but not least I owe thanks for the support from my colleagues and friends who assisted me in publishing the extended version of the book 15 years later, this time in English. Therefore, when developing the new chapters on the European dream, I was able to draw on not only my existing experiences and a plethora of sources, but also a wide range of comments by experts. Special thanks are due to György Szapáry, Dániel Palotai, Gréta Czene, Katinka Cseh and Gábor Meizer for helping me coordinate the preparation of the new edition, published by Pallas Athéné Könyvkiadó.

I would also like to thank my family for their support, my sons Máté and Ádám for their views of a new generation, Richárd for being born and my Zita for being with me; they provide me with a solid background and an inexhaustible source of motivation for my work. I am immensely grateful to them.

PART ONE

I.

The Euro Failure

INTRODUCTION

The first edition of this book was published 15 years ago.

At that time the main purpose of my book was to awaken both the European and Hungarian elites to the national interests, grand strategies and efficient warfare of the American Empire. The Empire – as with all empires in all times – wages wars against all who threaten the hegemon political, military and monetary status of the United States in the world.

By the time of the first edition of my book, in 2004, we were just a couple of years after the introduction of the euro in Europe. In the meantime, as Hungarians we suffered a political setback losing the general elections to irresponsible political forces in 2002. The European political elites were in an upbeat mood having smoothly launched the euro. As Hungarians, we were just at the beginning of a catalogue of economic disasters due to the new government’s mismanaged economic policies. For the Hungarian political class my message was a simple one: in Central Europe do not fight against the only superpower, take into account the Empire’s local interests, ride the waves instead of swimming against the tide.

For the European political and business elites I tried to send out another simple message: the American Empire will not put up with a rival global currency, they will wage all types of modern warfare to break up either the eurozone or the European integration, maybe both.

As a former Hungarian economic minister of course I failed to change the vision, strategy and decisions of European elites. As for Hungary, my book may have contributed to the change of political thinking in the conservative part of the Hungarian political class, leading finally to the change of course and government of Hungary in 2010.

Publishing a revised second edition of my book just 15 years later also comes with a simple purpose. I firmly believe that Europeans must wake up and admit the complete failure of their European Dream. Just for the beginning of the next two decades of the common currency, it is worth trying to persuade Europeans for a sincere reckoning.

The main element of the European Dream was to defeat the American Empire at home, in Europe and globally.¹ This European Dream was not publicly debated, on the contrary, it was a hidden project and deeply rooted in some western European thinking on the future of Europe. The key to this European Dream is indeed the introduction of the euro, because this was the first historical experiment to create a common currency for different nations without a joint state.² A currency without a state means two different future avenues at the same time. On one hand, it means a continuous endeavour to create the missing joint state: the euro is the final proof of the well-guarded mission of some European elites to establish the United States of Europe, the European Empire. On the other hand, a single currency without a common state means vulnerability only up to the creation of the missing element: the European state. By the time of the introduction of the euro the American Empire had become the only superpower, the US dollar enjoyed the monetary hegemon status as the only global currency: the consequences were clear and they could be foreseen.

The introduction of the euro challenged both the political and monetary hegemon status of the Empire, vulnerability meant not less than continuous threat of monetary warfare with all the potential losses, pains, sufferings and setbacks due to the half-baked euro project.

This vision of a European Empire turned to be a nightmare instead of a sweet and nurturing dream. It was a false dream that ended in a catalogue of disasters in many European countries from Greece to Germany.

Concerning the next 20 years, Europe should turn back to the roots of all European success stories, even economic miracles of the second half of the 20th century. At the very heart of all the successes we can find one vital element. The compass for all political, economic and financial decisions was to build up prosperity and keep peace in Europe. During these glorious times Europe did not want to become a rival global power to the American Empire: they wanted to be rich, happy and peaceful European nations.³ To start with, a French-German rapprochement was essential. The Americans initiated and supported the project to keep the Soviet Empire at bay, definitely keeping them out of Western Europe. The core strategy of Western Europe was to unify the western part of the continent to create an integrated political entity with four free flows: the free flow of goods, capital, people and ideas. At that time no one dared to come up with the idea to establish a rival global power against the United States of America.

Europe should rediscover the main concept of Ludwig Erhard, the chief architect of the German economic miracle, who used to say: The purpose of economic governance is to give prosperity for all. Again, we need to follow the same concept on a much larger scale. By now, the main purpose of European integration is to give prosperity for all Europeans.

The making of European economic miracles did not use a common currency in the second half of the 20th century. Evidently, a common currency was not needed for the excellent macroeconomic achievements of Europeans. Having used a common currency, however, resulted in a failure of historical proportion in the first two decades of the 21st century. All Eurozone countries fared better in the two decades before joining the euro than in the two decades with the euro. All EU countries outside of the eurozone fared better than the economies using the euro. The eurozone was lagging behind the two global rivals, America and China, in all vital macroeconomic areas, especially with regard to GDP growth figures and employment ratios, rate of unemployment, rate of employment, rate of unemployment in younger generations. The eurozone suffered from a diminishing role and ratio of the total global output, in the meantime China heavily increased its ratio and the American economy kept its former share of the world economy.

The euro proved to be a complete failure for the whole eurozone due to the huge negative gap between the gains of the lucky countries Germany, Austria, The Netherlands, Luxembourg, and the total losses of the losers Italy, France, and Portugal. In addition to the huge losses in the first 20 years, in the next two decades of the euro – without substantial structural changes of the currency zone – gains might diminish and losses may increase hugely. There are two reasons for that: the winners failed to prepare themselves for the future and the losers lured themselves into a vicious circle where nearly all macroeconomic trends form a downward spiral.

Germany became the clear winner in the last two decades of the euro within the EU and the eurozone, but due to widespread complacency German political and business elites made many wrong decisions and delayed good decisions: finally, by the end of the early two decades of the euro they joined the group of losers.

As for the biggest loser, Italy, eurozone membership offered the Italian political and business elites mainly bad or worse economic policy decisions due to the unbearable exchange rates and the strict austerity policies of Brussels and Germany. The ECB’s QE programs saved the losers – mainly Italy – from collapsing, but monetary policies have their limited scope and capacities. They can prevent the financial collapse of an economy but they are not able to ignite GDP growth or higher employment in the real economy based on enhanced competitiveness. The real losses of the loser euro member economies are still hidden because lower economic activities during years, even decades will cast long shadows on the future.⁴

In the case of a non-euro EU country, Hungary, all the wrong economic policy decisions made in the run up to the accession to the European Union, between 2002 and 2004, resulted in a lost decade for the country. Hungary lost exactly 10 years in terms of economic convergence due to 3 years, 2002 to 2005, bad economic policy management: the multiplying factor is higher than three.

Since 2010, Hungary has pursued an outstandingly successful crisis management based on the completion of an efficient fiscal consolidation scheme and the turnaround of the monetary policy of the Hungarian central bank. Hungary was pretty lucky, because the country failed to join the eurozone prior to the global financial crisis. That was the real reason why both the government and the central bank were able to follow innovative policies to turn the economy around. Hungary’s extremely successful crisis management used both orthodox and unorthodox economic policy tools: the mix counted for a lot. The fusion of traditional and surprising new elements of economic policies resulted in the only successful crisis management of the EU in the aftermath of the global financial crisis and the eurozone crisis. Hungary’s success and the failures of all other European crisis managements based on austerity policies in all other EU countries offers us the single most promising signal for the future of European integration. There is always a way out of the crisis by changing the course of our policies. There is still a deep eurozone and European crisis (there are parallel and intertwined political, social and economic troubles in all euro countries), so we clearly need a way out of it.

Historically, there is always a way-out for individuals, families, communities and even nations: the real thing is whether one starts to seek for it or not. There is definitely a way-out for the communities and nations of Europe from the trap of the already failed but still dangerous European Dream. Two simple changes seem to be necessary:

Firstly, European elites should change their vision for the future of Europe by saying no to the creation of a rival global power and saying yes to the wealth creation for all Europeans.

Secondly, the governing elites of the EU should change their policies dropping all programs based on austerity thinking. Regarding the next two decades of the European Union, a new vision for the future of the euro is instrumental to ending the open and hidden warfare of the Empire. The strategic solution for the eurozone seems to be crystal clear: change course, drop the daydreaming of a European global power and choose the vision of prosperity for all Europeans.

This change of course needs completely different political solutions, economic policies and monetary decisions on the part of the European Union from those presently. We need a new Age of Reformation, our deeply rooted, but failed and still almost religious beliefs of the role of Europe should be revised and completely reformed. The failed concept of the euro also needs to be reformed. It is not a means for building up a global power called the United States of Europe, on the contrary, it is one of the most useful tools to create wealth for all Europeans.

This reformed European currency⁵ might be completely different from the present euro as we know it. It might be the successor of the former DM zone, a much stronger currency, similar to the Swiss franc, for a smaller group of member countries. It might be based on all national currencies of all European nations. It might be an e-currency based on electricity after the fall of the petrodollar era and gold might also be one of the anchors of the new currency. There might be several other new and old structures, however, the present project should not be followed in the next two decades.

There are two simple reasons for that: the American Empire will continue all-out warfare against it and the final framework of a fully-fledged common currency – the United States of Europe – must not be completed.

Politics and politicians should lead the transition from the policies of austerity to the policies of abundance, but as an economist I may wish to start with a swift transition from the economics of shortages to the economics of abundance. Anyway, the main reason why the eurozone avoided financial catastrophe after the breakout of the eurozone financial crisis in the early years of the second decade of the euro were the ECB’s QE policies. The abundance of money, the first signal of a financial transition from austerity to abundance, whatever it takes, saved the euro and prevented the European Union’s breakup.

All austerity thinking and policies should be out and all policies aiming for a sustainable and green future should be in. The Age of Abundance based on sustainability is here. Anyone who sticks to the former age of shortages based on unsustainable thinking and using austerity policies would rid the Europeans of their bright, creative and prosperous future.

CONCLUSIONS

1. The euro is not a success – it is a failure.

We have to tell all Europeans: the euro project proved to be a failure in the last two decades. On the surface, this statement seems to be arrogant, untrue and biased.

One can argue that the euro is a success because the euro has delivered its two initial promises: price stability and exchange rate stability. Concerning price stability, however, the argument is flawed. The two decades before the introduction of the euro, in1999, were divided into two completely different eras and decades: the 80s and the 90s. The high inflation of the 70s due to the two oil-shocks resulted in the peak of the eurozone inflation rate of 11% by 1979, after the peak it fell close to 1% by 1999. In the second decade – between 1999 and 2018/2019 – it went up to nearly 3% by 2007 and in the aftermath of the global and eurozone financial crisis it fell to zero by 2015, coming again back to 1.7 by 2018.

It was not the euro or the lack of it that determined the price stability in the eurozone – and outside of it – in the last 40 years, from 1979 to 2019 there were extraordinary upheavals in the global and the European economy – oil shocks, consolidations, financial shocks – which resulted in double digit or near zero inflation rates in both the global and the European economies. The price stability of the first twenty years of the euro was not a uniquely eurozone achievement – the majority of the developed world enjoyed the same price stability during this period – and it was not due to the euro in the first place: the major cycles and trends of the global economy resulted in the same price stability patterns globally and in western European economies outside the eurozone, namely in the UK, Sweden or Denmark.

Regarding the exchange rate stability of the eurozone in the past two decades the argument is true, but there is another side of the same coin. The southern belt of the eurozone lost its flexibility to use competitive devaluation policies in order to enhance their economic growth and to create jobs. The euro-dollar exchange rate remained more stable with an average rate of USD 1.21 between 1999 and 2018, but this low volatility came with a high price tag: at least one-third of the eurozone lost its flexibility in the monetary policy. The euro became strong for the southern belt and cheap for the northern members.

Both resulted in a sharp decline of the eurozone competitiveness globally, because the gap between the southern and northern members of the eurozone expanded. Both groups seemed to gain a lot in the first decade – southern members piled up cheap loans and northern members financed this extravaganza – but both lost a lot by the end of the second decade. The first group became entrapped in a vicious circle of low growth, low employment, high unemployment, high public debt and low competitiveness. The second group became also entrapped in a somewhat hidden way, a part of the core countries of the eurozone (Germany, the Benelux countries, Austria, Finland) fell into the trap of a strange vicious circle. Financing the southern members was more profitable than investing at home, benefiting from a favourable exchange rate via exports was easier than investing in future industries and services: Germany shows all the unintended negative side-effects of this vicious circle by 2019.

2. The break-up of the western alliance.

The decision on the creation of the euro led to the break-up of a post-war alliance between America and Europe, between the American Empire and Western Europe. All clear and hidden hostilities between the US and the European Union were based on the strategic threat made by the euro to the global currency, the US dollar. The majority of the EU’s fundamental problems in the last two decades – the huge and growing North/South divide, the global lagging position compared to America and China, the crisis of the euro, the migration crisis, Brexit, EU/Russia hostilities, a new East/West divide within the EU and the missed further enlargements of the EU – cannot be separated from the warfare of the American Empire against an ally turned rival.

3. Two decades – two different stories.

The first decade of the euro, from 1999 to 2009, was an outright victory due to the smooth introduction of the euro and the gradual enlargement of the initial eurozone. All changed with the outbreak of the global financial crisis in the fall of 2008. All of a sudden the flawed structures of the eurozone resulted in a permanent crisis.

There were different and also intertwined crises in the eurozone: budget crisis, public debt crisis, crisis of the banking system, social crisis and political crisis. The causes for different types of European crises seemed to be different, however, the roots of all crises were the same: the challenge of the US dollar by the euro. In a war all the weaknesses of a fighter will be hit by focused and timely managed means of the other fighter. The American Empire used all means of modern warfare to hit firstly the weakest points of the European Union – Greece and the Southern belt of the eurozone – and later the strongest countries of the European Union – Germany and its close allies.

Behind all calamities of the last two decades of European history we can find two new approaches. On the European side, they made the deliberate decision to challenge the American Empire creating a rival global currency. On the American side, we find a carefully crafted decision – made most likely not later than by the turn of the century – to keep the dollar as the number one global currency by all means and at all costs. The clash of these two approaches was and still is inevitable.

The deliberate decision of the European political elites meant far more than a common currency for the members of the European integration. It meant the creation of a new European Dream: to build a new United States of Europe in order to challenge and defeat the American Empire. By the time of the Maastricht Treaty, in 1992, making the decision to create the euro, the nations of Western Europe were rich, some of them fared better economically and financially than America.

4. European successes did not need a common currency.

One can argue that the restoration of Western Europe did not use a common European currency and this is just not pure coincidence having economic miracles on one hand and the lack of a common European currency on the other hand. All successful economic recoveries used their tailor-made national currencies as the financial vehicle supporting the different economic policies of the various European countries. The Italian lira served well the Italian economic miracle of the 50s and the 60s, similarly, the French franc did it during the same decades, the Austrian schilling a little bit later or the almighty DM for the Germans until the euro. Different national currencies and monetary policies were suitable for all the economic successes because all the countries, their economic structures, labour markets, tax systems were hugely different from each other.

The one fits all currency would have been as wrong for the recovery of Western Europe after WWII, as the 10 points of the Washington Consensus were for many countries in the 80s and later. France, Italy, Spain, Portugal and Greece were extremely lucky to not have a common currency during their recovery and rise.

Finding the right timing to introduce a common currency for the hugely different economies and financial sectors of the European integration was a nearly impossible mission. Common currencies came with the completion of economic and political integration of regions, nations or countries: they emerged at the end, not at the beginning of a long integration process. National currencies emerged in the framework of nation states, new states created their new currencies as it occurred after WWI in Central Europe. The decision to create a new common currency for the members of the European integration, in 1992, after a couple of decades after starting it, in 1957, shows urgency: the economic integration of the founding eurozone members was still far from completion. The political integration was also far from completion: the common European government, budget and Parliament were very much symbolic gestures rather than representing real power. Just two decades later, however, all these initial gestures became the final governing bodies for all the members of the EU with real power.

5. Behind the euro: the future United States of Europe.

We can spot the real nature of the decision to create a common currency: it was based on the hidden agenda of some European political elites to accelerate the evolution of a new political entity⁶: The United Nations of Europe. The founding fathers of the European integration were outstanding French, German, Italian, and other politicians of their nations with a European perspective. They were pragmatic enough not to dream about a one-state Europe. Later, the politicians making the decision on the creation of the euro were dreamers of a totally unified Europe, they were not pragmatic at all, they were led by wishful thinking instead of realpolitik. The creation of a common currency by definition means to aim for a unified state, a joint government, a common budget and a common Parliament with all the powers over member nations and countries, as former nation states hold over their citizens.

The decision to create the euro meant several other decisions in disguise. At the heart of it there was a decision to build up the European counterpart of the United States of America, even the European version of the American Empire. A decision not based on the end results and firm foundations of the final stage of Western Europe’s integration by definition does not mean less than a historical experiment to change the course of modern Western history. The hidden agenda was to change the end result of Western political evolution, the American Empire, by replacing it with a new globally leading European power.

6. Timing is everything, timing is telling.

Why exactly in 1992? This was the first and probably the last moment to make the decision on the common currency and to show up with the European Dream. Up until 1992, the threats of the Soviet Empire did not permit the Europeans to break away from the American Empire. Indeed, Europeans could not afford the luxury of breaking up with the Americans. Conveniently enough, the Soviet Empire collapsed in 1992.

What about delaying the decision on the euro by a couple of years or decades? The reunification of Germany evidently promised to need plenty of energy, time and money in the 90s. Later, Germany might have emerged as a European superpower. By that time, Germany could not be persuaded to scrap the almighty DM. Delaying the decision might face the re-emergence of threats on the part of a new and old Russia. Later the euphoria of the victorious American Empire might evaporate, inviting unwanted early responses from the U.S. just at the outset of the euro project.

7. The euro was a political decision.

Evidently, the urgency to create a common currency cannot be explained by professional arguments. The common currency was not needed for the successful recovery of Western Europe, it was not needed for further advancements, even for the full unification of the continent it would not necessarily be needed either. If there were no professional causes behind the decision, the hidden political agenda to create a United States of Europe should be found as the culprit.

Introducing a common currency is just a part of the project, the single most important core element is to create a new central bank. Money has a long history with thousands of years of evolution, on the other hand central banks are new institutions with hundreds of years of history. Historically, central banks were founded either to wage wars or in peaceful times to recover after major wars. The central bank of Sweden, the central bank of The Netherlands and the Bank of England were established in order to gather money to finance the state’s warfare. The central bank of Austria was established, in 1816, in order to finance the economic recovery of the Austrian Empire after the Napoleonic wars and to strengthen the military power of the Empire for future wars. The Federal Reserve was established, in 1913, for the preparation of imminent European warfare, especially aiming to topple the British Empire. Indeed, the almighty British Empire entered WWI as the world’s biggest creditor and left the war as the world’s largest debtor in 1918. The mission was partly accomplished for the Fed, however WWII was needed to complete the change of the guard of global power.

Against this historical backdrop one can easily argue that the creation of a central bank is always a political project.

Building up a new European central bank was – historically and by definition – a political decision, so it is legitimate to pose the million dollar question: what for?

By now we see, that the establishment of the European Central Bank proved to be the single most significant achievement of the European Dream. Of course it is a sine qua non institution for a common currency, but the real firepower of the central bank was instrumental in saving the euro during the past 10 years. But the initial purpose of the European Central Bank was not preventing or handling a global or European financial crisis: in 1992 there was no one capable of foreseeing the 2007–2008 global financial crisis or the eurozone crisis in 2011–2012. So, what is the real reason for the political decision on launching the euro and founding the European Central Bank?

The real reason is crystal clear: a common currency and a central bank will – finally, gradually, step-by-step, during the usual ups and downs of European political evolution – result in a new state. Simply it could not be any other outcome, otherwise the whole European House would collapse. The political decision to create the financial twins of the euro and the European Central Bank poses the financial risk for all member countries: if you fail to create the state for the euro, the euro cannot be saved in the long run. Western Europe could lose nearly all its wealth, assets, jobs, pensions and incomes if the eurozone members would hesitate to go the extra mile to finalise the project of the European Dream: it is exactly the creation of the new state of the United States of Europe.

This is the all-in game of the euro.

8. The euro paradox.

It is a part of the euro paradox that, on one hand, individual national central banks most likely could not fend off the financial warfare of the American Empire in the last decade, only the ECB was able to do the job. On the other hand, it is also true that in the lack of a rival global currency, the American Empire could not feel the necessity to wage wars against the euro and the EU.

One can argue that the real purpose of the creation of the euro was not war, but peace, the main purpose being to finance the recovery of all European economies after the era of the American-Soviet Cold War. In principle, it might have been true, but practically it was not the case. In 2004, at the time of the EU’s biggest enlargement, the accession to the EU could have come with joining the eurozone at the same time. Some new members did it, others did not: it was not conditional. Having achieved the conditions for EU membership, it should have also meant meeting the conditions for joining the eurozone, having the common currency in place. But it was not conditional, so the euro was not planned to finance the recovery and reconstruction of Europe, it was planned to accelerate the evolution leading to the completion of the European Dream.

Another part of the paradox of the euro was that the common currency was designed for booming times, but proved to be instrumental in times of crisis. The ECB was indeed the lender of last resort and managed to save the eurozone. Still, with the lack of an effective common economic policy on the part of the European Union the ECB is the only game in town. It means two things at the same time: the ECB with efficient leadership is capable of saving the euro and the EU from the final breakup, but it is not able to – because central banks are not designed for this – prevent further stagnation, underperformance and economic policy failures of the EU.

Precise timing is everything. Timing to create the euro seems to be perfect: it could not have happened earlier or later. From a historical point of view, however, this excellent timing was the single most harmful mistake made by the European elites. The creation of the euro led to American-European warfare in the last two decades – latently in the first, openly in the second decade – preventing Europe from benefitting from the exceptional new opportunities of the 21st century. The European Union lost ground to the two global rivals – America and China –, suffered tremendous losses during American warfare and by the end of the two decades of the euro the EU is in a much worse shape than it was 20 years before.

The gap between the north and south in the eurozone is larger now than it was two decades ago due to the euro. Losers were not prepared to join the currency union when the winners did. The criteria outlined in the Maastricht Treaty⁷ seemed to have adverse effects on all members on the eurozone: for some members it came too late and offered too little and for others arrived too early and required too much from them. A currency union of the founding countries might have enjoyed the support of the U.S. in 1957. At the time of widespread dynamic European economic growth, a new common currency did not cause so much harm, as it did in the last two turbulent decades.

For the southern eurozone members, a common currency would have been viable much later, they would have needed a couple of more decades to catch up with the core countries capitalising on their independent economic policies and monetary policy regimes. It might seem wishful thinking now, but there is one lesson from human history – and it is worth repeating it again and again – helping us out of the trap. It is never too late to change course and move in the right direction.

9. There are hidden agendas in the euro project.

Evidently, there were and still are vital missing elements of a common currency: a joint and sizable budget, a finance minister and a ministry of finance, a banking union, clear exit