Former Bank of England Mervyn King Warns the Eurozone is Doomed!

It's interesting to see to former officials eschew establishment line to adapt a radical perspective. And it's even more intriguing when such proselytism comes from an ex highest central bank official of a developed economy.

I am talking of Mervyn King, the previous Governor of the Bank of England, who in his recent book, predicted that Eurozone will not only be headed to the gutters, but would likely dismember.

Here's the Telegraph:(bold mine)

He warns of a looming “economic [and] political crisis” triggered by endless bail-outs, austerity demands and pressure from the “elites in Europe” and the US to create “a transfer union” to solve the eurozone’s woes.

In the second extract of The Telegraph’s exclusive serialisation, Lord King warns that this has “sowed the seeds of division” in the bloc and created support for populist parties. Further steps towards political union, where countries are forced to cede sovereignty and yield to Brussels diktats, could spark a public backlash.

“It will lead to not only an economic but [also] a political crisis,” he says. “Monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy at the national level on the other. This is extraordinarily dangerous.”

However, Lord King, who often used sporting analogies during his decade at the helm of the Bank of England, says the alternative of struggling countries such as Greece being “temporarily relegated” from the bloc to regain competitiveness may also be “too late”.

Policymakers, already scarred by repeated rounds of brinkmanship, are unlikely to reach an accord, he argues. “The underlying differences between countries and the political cost of accepting defeat have become too great.

“That is unfortunate both for the countries concerned – because sometimes premature promotion can be a misfortune and relegation the opportunity for a new start – and for the world as a whole because the euro area today is a drag on world growth.”

Germany and the rest of the eurozone must “face up” to the fact that uncompetitive countries in the south can only prosper again if the bloc is broken up, Lord King argues.

Europe’s biggest economy faces the “terrible choice” of writing a blank cheque to support the bloc “at great and unending cost to its taxpayers” or calling “a halt to the monetary union project”, he says.

The “only way” to stop countries staring into the abyss of “crushing austerity, continuing mass unemployment” with “no end in sight to the burden of debt” faced by debtor nations is for them to abandon the euro.

“The counter-argument – that exit from the euro area would lead to chaos, falls in living standards and continuing uncertainty about the survival of the currency union – has real weight,” Lord King says.

“But... leaving the euro area may be the only way to plot a route back to economic growth and full employment. “The long-term benefits outweigh the short-term costs.”

The misguided ramrodding of inflationism to the public, or hidden taxation through currency debasement as subsidy to the political elites in order to prolong an unsustainable debt financed welfare warfare state,  the efforts to empower the unelected bureaucracy through increased centralization at the expense of the average citizenry, the deepening suffocation of the economic agents through imposition of byzantine taxes, regulations and mandates, the forcible integration of divergent societies, and presently, the 'refugee crisis' as consequence of the warfare state only provides clues to the path of the eventual demise of the EU.

I am reminded by the mainstream's economic icon, JM Keynes's trenchant perspective on inflationism which leads to the destruction of society. (bold added)

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.

Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

EU's modern day application of "all permanent relations between debtors and creditor...become so utterly disordered": from ZIRP to NIRP to war on cash.