What will happen when euro crashes

If it occurs, it does so quickly and always ends with a crash. Although there are observers myself included who frequently discuss what a reserve-currency crash would mean to the world, there is little or no discussion as to how this would impact people on the street level, and perhaps that discussion should begin. When currencies crash, the state often tries to float a new currency. Not surprisingly, the Zimbabwean government fought the use of the dollar, as they wanted to retain control of the economy and the people.

People were therefore penalised for using the US dollar and other currencies. Soon, most transactions, although illegal, are undertaken in the black-market currency. Second, since no one really wants the new currency, even the political leaders are soon using the black-market currency.

So, unless the EU has already prearranged a new euro, the US dollar might well be chosen as an immediate solution to the problem, as the US dollar is presently recognised and traded throughout Europe. Therefore, a relatively painless transfer could be made. However, the dollar, which is presently praised as being a sound currency, is really only sound in relation to the euro and some other lesser currencies.

Once its less stable brother, the euro, collapses, the dollar will be exposed. As the US dollar is a fiat currency and is on the ropes, the US and any other country that is using the dollar as its primary currency when the time comes will experience a currency emergency at the street level that will be unprecedented. The big question that is generally not being discussed is: The day after the crash and thereafter , what will be the currency that is used to buy a bag of groceries, a tank of petrol, a meal at a restaurant?

Certainly, the need will be immediate and will be on a national level in each impacted country, affecting everyone. I have discussed for some time that the US will be prepared ahead of time with a new, electronic currency. This will serve three purposes:. If the US does institute such a system, US citizens will then become the most economically controlled people in the world, overnight.

A portion of daily trade would occur under the table. Certainly, the government would crack down, and penalties might become severe. Elsewhere in the world, there would be greater freedom, but what would their currencies be? Exchange Rates UK.

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Europe will be the new Argentina! Violence erupting in the streets! Now we see the same sort of thing happening in Greece. People are rioting in the streets and protesting the imposition of austerity measures that are leaving families without the means of support, even without food in some cases. It's getting worse by the day. The politicians are forcing this on the Greek people, but it can only be done with heavy handed crackdowns, which are not working because we see that the protests are escalating.

The Greek government is caving in to demands from bureaucrats in Brussels who are telling them that they have to cut back on spending, which means laying off more and more workers. The hardships in society are rising and the demonstrations are gaining momentum and becoming more chaotic by the day. History shows that popular discontent can lead to the overthrow of governments if that discontent becomes severe enough and this is no garden variety recession, but a major and long lasting economic downturn.

How long can the Greek government continue to hold back this disorder? It's hard to say but as each day passes the pressures are mounting. The irony is, the solution to their problem lies right in front of their noses.

If they were to leave the euro and begin reissuing their own currency, their problems would go away almost overnight. The temptation has got to be great. Greece is not alone, there are four other countries that are "terminal" with respect to their deficits and they are having the same demands being placed upon them. One of them is Spain, a fairly large economy in Europe with a population of 40 million.

Where do the Europeans get the money to bail out Greece or if necessary, the others that are on life support? The answer is, they have to borrow it or take it from the savings of the people in wealthier nations like Germany. But even Germany no longer has a truly independent fiscal authority that can create money.

The amount of money they have to lend or to be used to bail anyone out another anyone, let alone another nation is limited. They are done! Milton Friedman said that the euro would never last! The great, Nobel Laureate economist, Milton Friedman once said that the euro experiment would not last more than a decade. Speculators have seized upon Europe's troubles and are now hammering the euro.

The price of credit default swaps, which are instruments that allow investors to bet on the likelihood of a default, are skyrocketing.

That is a sure sign that savvy speculators believe that a collapse is imminent! The credit default swaps of European countries is rising and in the case of Greece they have gone parabolic. Billions in speculative bets are pouring in making the collapse almost a "fait accompli. Any further credit downgrades would be fatal because it would raise the cost of borrowing when they already can't afford to pay for basic services.

These countries are on the brink and there is nothing they can do! Was Milton Friedman right? Before the launch of the euro in , Milton Friedman predicted that the Eurozone would not survive its first economic crisis. He noted that in a world of floating exchange rates, if one country faces a shock, it could simply respond by letting the exchange rate change. But with the arrival of the euro, that option is no longer available.

Friedman also highlighted the case of Ireland. In , he said the country should have been tightening its monetary policy but couldn't because it was tied into the new European currency.

We hear talk of a bailout, but by whom? Only the ECB can truly bailout Greece or one of the other European nations, but it's precluded to do so by the Maastricht Treaty, which is the framework of European governance. So where will the money come from? From investors around the world who are now asking for ever higher interest rates because of the risk that goes with lending to these shaky economies?

These are loans that Europe surely can't afford! Some people believe Germany will step up to save the weaker peripheral countries of Europe. But even Germany, the largest economy in Europe, is no longer a currency issuer. It cannot simply "print money" as it could in the old days of German reunification to help Greece and the others that are in trouble. Germany would have use the savings and wealth of its own citizens to save a non-German state.

Let me ask you We're all Americans, but in Europe, national pride still runs deep and there is populist resistance to this type of a bailout.. It's no wonder, then, why German Chancellor Andrea Merkel throws cold water on the idea every time you hear her comment on some new report that Germany was about to write a check for Greece.

What if we don't get a bailout? Then that means Greece simply knuckles under to the demands of the bureaucrats and the financial markets and it will have to continue to cut spending dramatically.