Generally I prefer to have low inflation and believe that it is very difficult to have low rates over a longer time, as creditors want to have higher rates, when they don't believe in contained inflation. As volatility increases, usually even higher real interest.
Certainly some things are easier to handle with a bit weaker currency/higher inflation. E.g. currency depression is certainly an easier way to gain competiveness than wage moderation.

I believe it is an advantage to have to be able to borrow in one's own currency, have the seignorage effect etc. The Euro has unique credibility due to the ECB statute. I'm not sure, but I guess the measures redstar suggests would reduce this credibility. While there is the advantage not to need wage moderation, there is also the disadvantage, e.g. for retired people, students on stipendium,... who can not strike, and often have a fixed amount of many, whichs value would shrink with inflation.

After all I believe as well that the current credit mess at least would have been smaller, if the interest rates in the US would have been higher. Certainly the interest rates of the Eurozone were even too low for Spain and Ireland. Malinvestment may not be better than no investment, even if it provides temporary work.


Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers