Correcting the euro zone's structural problems would cause the dollar to fall

The two main problems facing the euro zone are well known: The disappearance of capital mobility between euro-zone countries in the early 2010s, which made it impossible to use savings efficiently and made it necessary to reduce demand in countries that had previously had external deficits; since then, countries with excess savings have lent them to the rest of the world, in particular to the United States, and no longer to the other euro-zone countries; Insufficient solidarity between the member countries and insufficient transfers between them, which would reduce the zone's heterogeneity; the recovery plan is a first effort to set up such transfers, but it should be amplified and made permanent. If these two key problems in the euro zone were corrected, its savings would be invested in large quantities of European bonds (eurobonds) issued to finance the expanded and permanent recovery plan. The savings surplus of some countries (Germany, the Netherlands) would therefore finance the European recovery plan and no longer the United States, which is the case today. So, especially after the Biden plan, it would be very difficult to finance the US external deficit, leading to a sharp depreciation of the dollar in the absence of a sharp rise in dollar interest rates. Correcting the euro zone’s structural problems would cause the dollar to fall. Similarly, it is the euro zone’s problems that are making it easy to finance the United States’ huge stimulus package.