Scotland Should Plan On Having Its Own Currency

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When provinces propose a split with the mother country, they usually insist that they’ll continue to use the old currency. This is odd on its face since having your own money is usually considered one of the key attributes of a sovereign state. So what’s the appeal of keeping the old country’s currency? Greg Ip ponders the question:

Facilitating trade and capital movements is only one part of the story. Another, I think, is political and emotional. Forming a new country is fraught with risk. For savers, in particular the elderly, one risk looms especially large: that one’s retirement savings are suddenly redenominated in a new currency whose value is then inflated away. In both Quebec and Scotland, independence is mostly a movement of the left, and a separate currency would create the ever-present temptation to use the printing press to accommodate fiscal expansion and industrial policy. By promising to keep the old currency, separatists are reassuring savers that they will not succumb to the temptation of inflation.

I wonder if this is true? I hope it’s not. I don’t have a strong opinion about Scottish independence, but I do have a strong opinion about this. Here it is: if you favor independence, but only if Scotland holds onto the British pound, you’re an idiot. If you don’t trust a Scottish government to run its own monetary policy, then you don’t trust a Scottish government. Period.

There are other arguments for currency union, of course, but I don’t think they add up to much. Nor do I truly believe them. They mostly seem like post hoc rationalizations to provide people with a more palatable reason for keeping the British pound than fear of a reckless Scottish monetary authority. Generally speaking, the history of currency unions is simply too fraught for anyone who’s paying attention to really think it’s a good idea. And as Ip points out, they rarely last very long anyway.

An independent Scotland should have its own currency and its own monetary policy. If this makes you nervous, then the whole idea of independence should make you nervous.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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