From Hayek's Point of View, the Economic and Monetary Union (EMU) Focused Too Much on Macroeconomics as Developed or Understood by the Keynesians

From Hayek’s point of view we can say that the EMU [Economic and Monetary Union] focused too much on ‘‘macroeconomics’’ as developed or understood by the Keynesians. The interpreters of Keynes, and perhaps Keynes himself, believed that an all-powerful central authority can perform fiscal and monetary policy to increase employment and income at practically no cost. Hayek opposed that view on microeconomic grounds, based on the subtle operations of credit expansion and monetary policy through the channels of the economy. In a sense, the Keynesian arguments call for a ‘‘quick and dirty’’ dealing with the recession whereas the more subtle Hayekian arguments deal with the causes of the depression which can be traced back to credit expansion and monetary policy before the recession. Of course, the all-powerful central authority of Keynes materializes in the modern Bureaucracy of the EU and the roots of the Keynesian idea, in that respect, can be traced back to the Soviet paradigm of the early 1920s.

--Efthymios G. Tsionas, The Euro and International Financial Stability, Financial and Monetary Policy Studies 37 (Cham, CH: Springer International Publishing, 2014), 47.

The Greek Economy Is Completely under the Influence of Monopolies or Cartels

The Greek economy, for example, is completely under the influence of monopolies or cartels and the actual work produced by the Competition Committee is quite small. Five hundred job descriptions or occupations are ‘‘protected’’ in Greece, since the 1920s, including for example taxi drivers, dentists, pharmacies, lawyers etc. In industry or retail, oligopolies rule freely the entire market. It is not surprising then, that since 2008 prices have remained high for most if not all retail products without any tendency to fall, despite the dramatic reduction in household incomes.

--Efthymios G. Tsionas, The Euro and International Financial Stability, Financial and Monetary Policy Studies 37 (Cham, CH: Springer International Publishing, 2014), 5.

Some Countries in the European Periphery (Greece Being the Leading Example) Continued the Keynesian Practices up until the Early 1990s

In the period after the World War II, governments were totally devoted to the Keynesian ideas of irresponsible fiscal and monetary expansion up to late 1970s when ‘‘stagflation’’ appeared. Some countries in the European periphery (Greece being the leading example) continued the Keynesian practices up until, roughly, the early 1990s. It is true that the problems of inflation in the mid 1980s necessitated the adoption of certain austerity measures, but pure fiat money creation as well as fiat money creation through excess borrowing, continued. Despite inflationary expectations, the private sector was expecting ‘‘cheap money’’ in the long run. By late 1990s, the credit expansion was booming, and the Greek Olympic Games put much more pressure on public finances as well as on the public debt—which began skyrocketing since the early 1980s, under a socialist administration.

--Efthymios G. Tsionas, The Euro and International Financial Stability, Financial and Monetary Policy Studies 37 (Cham, CH: Springer International Publishing, 2014), 86.