. . . and Jane Jacobs saw it back in 1983, before the euro even existed.
Almost 20 years ago, I picked up her book Cities and the Wealth of Nations: Principles of Economic Life at a used bookstore in upstate New York. Jacobs wrote this book in response the emergence of stagflation in the United States. As an informed and educated layperson, she examined economic history with a critical eye and an urbanist's heart, looking for the laws that explained what was going on -- which the economic theories of the time did not.
Her findings ring uncannily true, although when I've tried to introduce her theories into discussions of the economy, people with training in economics dismiss them as ridiculous -- yet will not explain to me why they are. I've long wished for someone in the know to come forward and either confirm or refute it. It hasn't happened yet. It's as if there's an unspoken agreement to refuse to acknowledge its existence.
Nevertheless, she pointed out the flaw baked into all "imperial currencies," as she calls them -- currencies like the U.S. dollar and the euro, that must respond to the ups and downs of many different economic regions. And that is that they can't simultaneously provide corrective feedback to both economies that are strong and economies that are weak.
