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According to the pre-2008 economic consensus on monetary policy, bad central banking is the dominant force behind recessions. This theory is in no way disproved

According to the pre-2008 economic consensus on monetary policy, bad central banking is the dominant force behind recessions. This theory is in no way disproved since central banks during the Great Recession failed to act according to the theoretical recommendations. The US is back on track (kind of) with QE, and perhaps coincidentally, the US economy is doing quite a bit better than the Eurozone. The ECB, which was tasked with maintaining inflation levels and nominal expansion throughout Europe, has completely abandoned this goal to serve the (short-sighted and wrong) interests of Germany and other economic powers. If we are to believe the pre-2008 economic mainstream, it is absolutely the fault of the countries giving the loans, who swamped the Eurozone with expansionary policy then yanked it away when it was needed most. Right now it's not politically convenient to believe in those economic theories, so you don't hear much about them from politicians or mainstream press.

SovietDissident 11y ago
It seems to me that if the entire Eurozone was subject to the same monetary policy by the ECB, it leaves a wonderful base for comparison. In other words, we can forget about monetary policy in our analysis and compare the relative health of other economies in the Eurozone based on their governments' fiscal policies and fundamental economic productiveness. Greece, Spain, and Portugal fail the test.
- cynicalkane 11y ago
  The entire motivation behind monetary economics is that there doesn't exist a "baseline economy" independent of monetary policy. This was the primary argument against the Euro. Developing economies are hurt more in recessions, and benefit more from widely varying monetary policy. This is true no matter how "good" or "bad" a country is, even if the "badness" of a country was justification for economically punishing its citizens in the first place (it isn't).

SovietDissident 11y ago

It seems to me that if the entire Eurozone was subject to the same monetary policy by the ECB, it leaves a wonderful base for comparison. In other words, we can forget about monetary policy in our analysis and compare the relative health of other economies in the Eurozone based on their governments' fiscal policies and fundamental economic productiveness. Greece, Spain, and Portugal fail the test.

cynicalkane 11y ago
The entire motivation behind monetary economics is that there doesn't exist a "baseline economy" independent of monetary policy. This was the primary argument against the Euro. Developing economies are hurt more in recessions, and benefit more from widely varying monetary policy. This is true no matter how "good" or "bad" a country is, even if the "badness" of a country was justification for economically punishing its citizens in the first place (it isn't).