Rabobank Group

29-12-2011 | Economic news

We are in the final days of 2011. A year in which the euro’s continued existence came under threat, primarily owing to slow and sluggish political decision-making. And the year that is concluding with the European economy in recession.

So there is plenty of food for pessimists and cynics and they have made a meal of it recently. They had their finest hour and came out of the woodwork. Columns in Dutch newspapers have been packed with assertions that the euro simply cannot work and calls for returning to the guilder. They claim a non-gold-based monetary system is destined to fail. Everything was better before and so we need to go back in time straightaway.

A lack of historical understanding
I am not crazy about such regressive professional doomsayers. They generally show little creativity and often a lack of historical understanding. Those who long for the return of the guilder have already forgotten the monetary chaos of the 1970s and 1980s. They also fail to remember that the Netherlands handed over its monetary autonomy to Germany back in the early 1980s. Those who cry for gold try to create the impression that the gold standard age was a crisis-free period when everyone was paid in hard currency. Nothing is further from the truth. The majority of people have never seen a gold coin, let alone owned one, not even during that period. So it has apparently been forgotten that the European population has made huge progress in real terms since the abolition of the gold standard. We live in a broadly-shared prosperity that would have been unimaginable to our forefathers living in the gold standard age.

Money as a binding agent
People often try to dismiss the optimists as dreamers, while people with a more pessimistic view of the world are portrayed as deep thinkers. The intelligentsia then launch discourses on how the euro cannot work because people do not feel European. Because money is not only a means of exchange, payment and savings, it is also a binding agent. It sounds good and intellectually consequential, but is absolute rubbish. I took another look at my collection of cowrie shells (the world’s most widely used money for centuries, which gold cannot hold a candle to) for any signs of ‘binding qualities’. But I unfortunately did not find any. But I did spot them in abundance in my small collection of ‘dictator money’. They bear beautiful portraits of national unifying figures such as Tito, Saddam Hussein, Pol Pot and Idi Amin. For what it is worth.

Pessimists vs Optimists
Pessimists say things are impossible because they have never been done before. How often must the Wright brothers have been laughed at by ‘realists’? Making something fly that is heavier than air? Preposterous idea. The same goes for the founders of Europe: Who could imagine that no major wars could take place in Western Europe for more than 60 years? It had never happened before.

But we have now been flying and living in peace since 1945. So optimists also have a different attitude. If an idea does not work immediately, they keep searching. Is the euro not functioning optimally? Then we will find extra measures to ensure it becomes better. We can thank people with this mindset for the fact that we no longer wear animal skins and live in the mud. They help the world move forward. And they will also help Europe make progress and then the doomsayers can go back where they came from. Until the next recession naturally. I wish you an optimistic 2012.