In a desperate attempt to convince a sceptical public the Estonian under-secretary of the Ministry of Finance, Aare Järvan, has published an article in Postimees on the possible impact of Euro entry on the economy of Estonia. In a classic piece of self deception he claims optimistically that “through joining the ‘euro-zone’ we [Estonia] will have a real possibility for the first time, to participate in the decision-making process concerning the continent’s monetary policy”.

Well I suppose Estonia will participate, but it will have no influence. Why does the good under-secretary think that one voice – and a very small voice at that – would have any influence? All he has to do is to look at the damage single interest rates have been doing to significantly larger countries and economies like Ireland and Portugal to realise the level of participation the Estonians will have in Euro zone decisions.

He goes on to say that the

“euro cannot fulfil the functions of money worse than the kroon [present Estonian currency] [...] The impact of inflation can be related to the one-time act of conversion [prices to euro]. This is a limited impact and we should all stand against possible abuses in this field. The effect of inflation may also be due to sectoral impact derived from the overall speed of economic growth”.

Again Järvan veers to the blindly and foolishly optimistic. The Euro cannot do the job worse than the Kroon? I was unaware of quite how bad the Kroon was as a currency. The high inflation low growth in Estonia that I have heard about must all be down to the dreadfully currency? What is he going on about? The impact of inflation as a one off? Well yes there are one off inflationary pressures in Euro changeover, but please don’t discount the inflationary aspects of the single currency zone after the one off effects. Indeed the inflation versus growth equation in the Eurozone has shown almost continuous preference to inflation.

Mr Järvan seems to be in the final stage of euro dementia, by which the sufferer seems to believe that a dose of the single currency can cure all ills. However of course he is merely applying a quack medicine or poultice, as if he was a mediaevalist who believed in the efficacy of bleeding a patient until the fellow was too weak to protest.