Spain, Paul Krugman reports, is in trouble in part because of its adoption of the euro. Can it return to the peseta? Not without risking a banking crisis. The UK is in better shape, even though it's sustaining a debt level similar to Spain's, because it never adopted the euro.
Same with the US. We have debt but we have the dollar. Still, we face a real threat from the right.
The bad news about America is that a powerful political faction is trying to shackle the Federal Reserve, in effect removing the one big advantage we have over the suffering Spaniards. Republican attacks on the Fed — demands that it stop trying to promote economic recovery and focus instead on keeping the dollar strong and fighting the imaginary risks of inflation — amount to a demand that we voluntarily put ourselves in the Spanish prison.
Let’s hope that the Fed doesn’t listen. Things in America are bad, but they could be much worse. And if the hard-money faction gets its way, they will be.
Republicans (nothing new here) are willing to put America at risk rather than face a continuing economic recovery during the Obama administration. We've taken huge steps away from an economic crash. The idea that a Democratic administration and Congress could be credited with that is too much for Republicans.
Just as Republicans are willing to play brinksmanship games with the unemployment insurance of jobless Americans, they are willing to put America's economy at risk for political gain.
