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Great summary - I'm with you right up to the point where you think less monetary freedom is actually good because it will force the Eurozone to "tighten its bel
by jayruy 16y ago
Great summary - I'm with you right up to the point where you think less monetary freedom is actually good because it will force the Eurozone to "tighten its belt". Miracles do happen, but just consider the political animosity already bubbling up in the richest and poorest countries.
Politicians will give the "belt tightening" bit a try; no one wants to be seen as acting in bad-faith towards European solidarity, but as soon as their electorate bubbles over it's peace out. Either the richest few or poorest few countries will drop out of the Euro; I'd be extremely surprised if it maintains the composition of today.
- anigbrowl 16y agoFor sure. I'm actually more of a Keynesian (ie a believer in financial stimulus during a crunch even if it means a temporary loosening of monetary policy) but obviously as soon as growth has returned that creates the responsibility to start paying off the resulting debt. I'm a little more optimistic than you about the cohesion of the euro, but only a little, sad to say.
- jayruy 16y agoI'm with Tyler Cowen on applied Keynesianism (http://www.marginalrevolution.com/marginalrevolution/2010/05/is-there-a-general-glut.html http://www.marginalrevolution.com/marginalrevolution/2010/05...) - sure it can work but it's a political quagmire on the national level. Now take that to the international level of the Euro, and you get my general feeling on the matter.