If they adopt the Euro, then I think︃ taxes will definitely rise. As they will have no other choice to bring in money︄ once s**t hits the fan. It is going to be an absolute disaster I don't︅ think people realise tbh. Prices double, wages only up 20% at best.
Bulgaria Gets Green Light for Eurozone
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Bulgaria will lose a lot of flexibility after adopting the euro. The currency board kept politicians in check for years. Once it is gone, nothing will stop them. There is a real risk that fiscal discipline will disappear too. Prices will go up. Maybe not right away in official numbers, but the market will push them higher. This already happened in Croatia.
I don't understand why everything should become more expensive in Bulgaria with the introduction of the euro?
AFAIK the BGN has been pegged to the EUR (or Deutsche Mark at the time) since 1997.
So, what is the difference between the current situation and the situation after the rollout of the euro in Bulgaria?
Please enlighten me! 🙂
AFAIK the BGN has been pegged to the EUR (or Deutsche Mark at the time) since 1997.
So, what is the difference between the current situation and the situation after the rollout of the euro in Bulgaria?
Please enlighten me! 🙂
Aside from "rounding errors" by businesses, the main issue is under the currency board Bulgaria cannot print money and is restricted from taking on excessive debt. Foreign reserves must back every lev in circulation. This forces discipline.
After euro adoption, Bulgaria gains︀ access to cheap ECB credit, and politicians can borrow far more. But if that borrowing︁ does not lead to productivity gains, and is instead wasted or siphoned off through corruption︂ (what do you think will happen in Bulgaria?), it creates monetary inflation. More money chasing︃ the same goods = higher prices.
You also have the issue of the country being︄ a low-export one. The euro is designed for export giants like Germany, not Bulgaria. So︅ your economy inflates, but your exports don’t grow fast enough and you run trade deficits,︆ and your debt becomes harder to service.
Check back here in 1 or 2 years︇ to see how fucked it up gets there.
What makes it even sadder is that︈ the people don't want it,zero democracy in the EU. It will take a massive protest︉ to stop it. These politicians operate without any fear of reprisal. There is no consequence︊ for their actions. If you started coming out of your office and seeing your colleagues︋ hanging from lamp posts, it might make you think twice about who you actually work︌ for - the people or the globalists.
After euro adoption, Bulgaria gains︀ access to cheap ECB credit, and politicians can borrow far more. But if that borrowing︁ does not lead to productivity gains, and is instead wasted or siphoned off through corruption︂ (what do you think will happen in Bulgaria?), it creates monetary inflation. More money chasing︃ the same goods = higher prices.
You also have the issue of the country being︄ a low-export one. The euro is designed for export giants like Germany, not Bulgaria. So︅ your economy inflates, but your exports don’t grow fast enough and you run trade deficits,︆ and your debt becomes harder to service.
Check back here in 1 or 2 years︇ to see how fucked it up gets there.
What makes it even sadder is that︈ the people don't want it,zero democracy in the EU. It will take a massive protest︉ to stop it. These politicians operate without any fear of reprisal. There is no consequence︊ for their actions. If you started coming out of your office and seeing your colleagues︋ hanging from lamp posts, it might make you think twice about who you actually work︌ for - the people or the globalists.
Thanks for your reply, but this exactly is the point I do not get.
Since BGN pegged to EUR, they cannot print money at the moment or they will lose the peg, wouldn't they?
Yes, that's right. I was there recently. The︀ people really don't want this and the government doesn't care.
Since BGN pegged to EUR, they cannot print money at the moment or they will lose the peg, wouldn't they?
Yes, that's right. I was there recently. The︀ people really don't want this and the government doesn't care.
The currency board that has been in place since 97 requires that foreign currency reserves must back every lev. So there is a hard limit on debt, which is why Bulgaria has one of the lowest debt-to-GDP ratios in Europe.
Entering the Eurozone takes away that requirement,︀ as there is no longer a currency board. Monetary policy is outsourced to the ECB.︁
And that means that Bulgaria can access cheap eurozone credit, which politicians, of course, will︂ do. They will borrow as much as they can at least initially service. There is︃ not a hope in hell that this leads to any productivity gains, so will only︄ cause inflation. Eventually, you will get a Greek-style crash IMO.
As for what happens to︅ the foreign reserves, I think 1/3rd of it goes to the ECB, the rest we︆ are told is "secure". So I assume it will quietly disappear and when someone asks︇ in a year or two it will have gone missing.
Entering the Eurozone takes away that requirement,︀ as there is no longer a currency board. Monetary policy is outsourced to the ECB.︁
And that means that Bulgaria can access cheap eurozone credit, which politicians, of course, will︂ do. They will borrow as much as they can at least initially service. There is︃ not a hope in hell that this leads to any productivity gains, so will only︄ cause inflation. Eventually, you will get a Greek-style crash IMO.
As for what happens to︅ the foreign reserves, I think 1/3rd of it goes to the ECB, the rest we︆ are told is "secure". So I assume it will quietly disappear and when someone asks︇ in a year or two it will have gone missing.
And despite having had one of the lowest govt debt-to-GDP ratios, Bulgaria experienced︃ a huge asset bubble in the late 2000s, leading to a crash of around >50%︄ in the real estate market and >80% in the equity market in 2009, similar to︅ Greece. How do you explain that?
That was a private credit boom. The Lev / peg doesn't make you immune from that. But Bulgaria didn't need a sovereign bail out, did it? And public debt stayed low, the peg held.
Under the euro, Bulgaria would have been forced into ECB/IMF-style austerity with no monetary levers of control︀ and potentially bailouts with strings attached ie fire sale assets.
Giving politicians and banks even︁ more access to cheap euro credit is the recipe for a faster, more severe bubble︂ and a slower recovery.
I think your post serves as a good warning of why︃ it's not a good idea.
Under the euro, Bulgaria would have been forced into ECB/IMF-style austerity with no monetary levers of control︀ and potentially bailouts with strings attached ie fire sale assets.
Giving politicians and banks even︁ more access to cheap euro credit is the recipe for a faster, more severe bubble︂ and a slower recovery.
I think your post serves as a good warning of why︃ it's not a good idea.
Bulgaria is a country known for its extremely friendly and polite people. However, when it comes to banking, caution is advised. As with many Eastern European countries, the strength of banking supervision can be inconsistent. That said, major Bulgarian banks that fall under the scrutiny of the European Central Bank (ECB) offer a higher degree of reliability.
From a business perspective, Bulgaria may present certain advantages. As an EU member state with one of the lowest corporate income tax rates in the bloc, it could be a viable option for individuals or businesses seeking a cost-effective European base. Still, it’s essential to weigh the regulatory︀ environment carefully before making any commitments.
From a business perspective, Bulgaria may present certain advantages. As an EU member state with one of the lowest corporate income tax rates in the bloc, it could be a viable option for individuals or businesses seeking a cost-effective European base. Still, it’s essential to weigh the regulatory︀ environment carefully before making any commitments.
Bulgaria has been a member of the European Union for many years and is fully subject to all relevant EU directives, including those on taxation and administrative cooperation (such as ATAD). However, there’s a clear reason why Bulgaria was kept from adopting the Euro for so long: the country lacked a sufficiently credible regulatory and supervisory framework for its banking and financial institutions.
As a result, despite EU membership, Bulgaria retained its national currency, the Lev, which is︀ pegged to the Euro at a nearly fixed exchange rate. This arrangement has allowed Bulgaria︁ to maintain monetary stability while remaining outside the Eurozone.
In this context, I see no︂ compelling reason to expect tax increases simply because Bulgaria may adopt the Euro. Whether a︃ country uses the Euro directly or maintains a currency pegged to it, the implications for︄ monetary policy are largely the same. The adoption of the Euro, in and of itself,︅ is not a meaningful driver of higher taxation. China has a currency (the Chinese yuan)︆ which is pegged to the US dollar, but it doesn't share the same fiscal policy︇ of the United States...
As a result, despite EU membership, Bulgaria retained its national currency, the Lev, which is︀ pegged to the Euro at a nearly fixed exchange rate. This arrangement has allowed Bulgaria︁ to maintain monetary stability while remaining outside the Eurozone.
In this context, I see no︂ compelling reason to expect tax increases simply because Bulgaria may adopt the Euro. Whether a︃ country uses the Euro directly or maintains a currency pegged to it, the implications for︄ monetary policy are largely the same. The adoption of the Euro, in and of itself,︅ is not a meaningful driver of higher taxation. China has a currency (the Chinese yuan)︆ which is pegged to the US dollar, but it doesn't share the same fiscal policy︇ of the United States...
To use︆ chat gpt effectively you actually need knowledge prior to the inputs. It's at 110-120 IQ︇ level. Prob reach 200 eventually which is a game changer. But for now, it puts︈ out stuff like your post above.
It's fairly obvious why taxes are likely to go︉ up. History shows the Eurozone results in debt based spending. And when you have government︊ involved, the likelihood of that leading to productivity gains is about as likely as the︋ Epstein list being released.
When the debt becomes unserviceable, where do you think the government︌ looks to first? Increased tax revenues.
Ask your AI if taxes increased in Greece, Spain,︍ Italy, Ireland and Portugal post Euro adoption and post the results...
It's fairly obvious why taxes are likely to go︉ up. History shows the Eurozone results in debt based spending. And when you have government︊ involved, the likelihood of that leading to productivity gains is about as likely as the︋ Epstein list being released.
When the debt becomes unserviceable, where do you think the government︌ looks to first? Increased tax revenues.
Ask your AI if taxes increased in Greece, Spain,︍ Italy, Ireland and Portugal post Euro adoption and post the results...
It is not possible to comprehend this from a standpoint of neoliberal economics curriculum which is orthogonal to reality. Consult MMT for coreect description of monetary system. But do not prescribe to everything they say because, at the end, they are just commies in disguise.
This is the real problem with tax hikes in Europe. There are just too many leftists, pro-greeens, and all sorts of commie-garbage trying expensive social experiments that ultimately ruin economies and their own people... But don't blame monetary policy... Actually that is the only thing working in Europe right now (and the ECB is basically︀ the most reliable EU institution today).
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