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Could Holland DITCH the euro? Dutch MPs order probe into whether Netherlands could leave the single currency – and how

from Daily Mail:

Dutch MPs are considering whether the Netherlands could ditch the Euro, after ordering a report on the future of the currency.

The country’s relationship with the single currency is set to be debated in parliament once the findings are published.

The probe, which will also look at how Holland might be able to pull out of the Euro, was prompted by concerns the European Central Bank’s ultra-low interest rates are hurting Dutch savers.

Dutch MPs are considering whether the Netherlands could ditch the Euro, after ordering a report on the future of the currency

The debate on the Euro will come after the country’s elections in March, which is expected to change the make-up of parliament dramatically.

While most Dutch voters say they favour retaining the Euro, Geert Wilders’ eurosceptic far-right party is expected to make large gains.

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1 comment to Could Holland DITCH the euro? Dutch MPs order probe into whether Netherlands could leave the single currency – and how

  • Ed_B

    “The probe, which will also look at how Holland might be able to pull out of the Euro, was prompted by concerns the European Central Bank’s ultra-low interest rates are hurting Dutch savers.”

    Ultra-low interest rates hurt savers everywhere. The shame of this is that once the interest rate falls below about 2.5%, it ceases to be a factor in most business decisions, so there is no real need to reduce the rate of interest below this point. Certainly, the benefits of reducing interest rates are subject to the law of diminishing returns, yet the central bankers act as if interest rate reductions are linear with their benefits. They are not.

    Savers and spenders exist in a symbiotic relationship. Savers lend out their money and expose it to the risk of loss in exchange for fair compensation for accepting that risk. Borrowers get the money they really need at a fair rate but do not have money that is very cheap or even free lavishing upon them. When the central bankers get involved in this mutually beneficial arrangement, there are some limited benefits that occur but they very soon cease to be all that beneficial and instead become onerous. If the return on one’s savings falls to the low levels we’ve all seen over the past 8 years, there ceases to be sufficient benefit to saving. One might as well invest their money in food and other consumable items to protect it from inflation.

    The best way to set interest rates is not via a panel of academics pontificating on whether or not to raise or lower rates, by how much, and for how long. Mr. Market is WAY smarter than any gaggle of unelected bureaucrats. Interest rates should be set in the same way that stock prices are set, which is to say via competitive bidding between savers and borrowers. The net effect of this would be many very small changes in rates rather than a few very large ones. Imagine drawing a graph using only a few widely spaced points vs. drawing that graph using many points that are much closer together. Which will be the more accurate graph? Clearly, the one that uses many closely spaced points rather than a few far more spread out points. This is not rocket science. It is merely some mathematical common sense, something that seems to be in substantial shortage these days.

    But the power and profits that evolve from being able to set interest rates will not be given up without one helluva fight. Perhaps Trump should simply not fill any vacancies that occur on the FOMC for a few years? Maybe that would whittle the Fed down to size? They can use some of that… and so can We the People.

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