Greece’s monetary troubles have dominated the headlines now for weeks, releasing a torrent of analysis assigning blame or proposing solutions. Yet that torrent overlooks the bigger tragedy in which the recent Greek drama is but the latest act:  governments’ misuse of currency as a tool of politics.
What currency is meant to do—and how the euro betrays that purpose
Ask any competent economist what currency is and he or she will tell you that it’s a generally accepted medium of exchange meant to overcome the difficulties of barter. A specialist might go on to explain how certain currency systems do a better job of facilitating exchange and of avoiding financial crises than others. Few would think of currency as a tool of politics.

The euro’s creators, in contrast, meant it to serve not just as a medium of exchange but as a symbol of European solidarity. By treating currency as a political tool, they unwittingly put politics at loggerheads with economics. Economic considerations demanded that the European Central Bank resist bailing out fiscally irresponsible eurozone members. Politics, on the other hand, insisted that that the eurozone be held together by hook or by crook. So far politics has prevailed. But precisely because it has, the euro’s fate hangs in the balance.