Merkels Wants Deflation for Europe
The Ossie whose understanding of economics is still blurred by Friedman and Hayek’s enthusiasm for deregulated markets and flat taxes is lambasting the Fed and the BoE for the heinous crime of quantitative easing: basically printing money like there’s no tomorrow to avert deflation and global depression.
Europe’s new Iron Lady is even criticizing Trichet for doing some little covert easing on the side. Traditionally, central banks have been sacred to German governments. And yes, right-wing teutons would have us believe that the country is still traumatized by a bout of hyperinflation happening 85 years ago, so that monetary orthodoxy and financial rigor shall never be doubted, much less undermined. So Ms Merkel, while the country is sinking into a hole dragging the whole of Europe into unemployment and eurozone is falling into deflation (it wouldn’t if the ECB were doing some serious quantitative easing), is worrying about inflation and fiscal profligacy. Call it the Maastricht fixation. Hope the european and national elections punish here. If that weren’t the case, it’d be as if europeans had signed their own pink slip and rewarded Europe’s present élites for the mess they got us into and cannot get us out of.