I’m far from an expert in economics, politics, or history; quite the contrary.  Which is why I try to cast events in more familiar, anthropomorphic terms, and also why such analogies are dangerous. Caveat lector—now, let’s get on with the story.

There once was a large family, with many brothers, uncles, and cousins spread over many different places. Each of them led their own lives.  The extended family spanned all sorts of lifestyles, from successful businessmen, dignified and well-dressed, to smart but somewhat irresponsible bon viveurs.  They lived in many different places and they occasionally exchanged gifts and money, some more frequently than others (admittedly, this part is rather weak in its simplicity, but a single analogy can only be taken so far). But they were getting tired of running to Western Union, paying transaction fees, losing money on currency conversions due to volatility in exchange rates, and so on. Furthermore, some of the more powerful family members had gotten into nasty feuds (world wars).

So, under the leadership of some of the more powerful siblings (Germany and France) they thought: well, we have enough money to go down to an international bank and open a common family account in a solid currency, say, dollars (they in fact created their own currency and bank, perhaps to avoid associations with existing institutions, but it’s probably safe to say that they heavily mirrored those of one of the leading siblings).  Then it will be so much easier to do the same things much more efficiently.  The richer craftsmen and businessmen among them could send their stuff with less hassle and waste [e.g., paragraph seven], and the poorer ones could gain a bit by wisely using their portion of the funds and an occasional advance withdrawal.

The leading siblings knew how to keep their checkbooks balanced, and it seemed reasonable to assume that these methods were general enough and suitable for everyone.  So, after opening the family account with all of them as joint holders, they shook hands and simply agreed to use the money wisely, pretty much in the way that had worked well for the richer and more productive ones (stability and growth pact).  Once in a while they might briefly meet and agree on some further rules of how the money should be used, but basically each one of them went their way, living the life they always had, managing their portion of the family funds.  One of the more cynical siblings (England) was a bit skeptical about opening a family account while living their separate lives apart, so it chose to stay out, at least for a while.  Times were good for several years, but they didn’t last forever.

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