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But how, if not by way of increasing the periphery's competitiveness, are the imbalances supposed to be resolved? Germany CANNOT become less productive and competitive, because it needs to compete on world markets with players like the US, the UK (sic!), China, and others,

The €-Mark floats w.r.t. the US$, GB£ and Yuan. There is nothing wrong with six per cent yearly inflation in Germany that a four per cent yearly depreciation of the €-Mark won't solve.

Don't like that? Tough cookie. Then you don't like the common currency.

(Yes, a common currency convergence must always be towards the highest structural inflation rates in the currency zone, because pushing your economy below its structural inflation rate creates financial imbalances of the sort we are seeing at the moment.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Dec 9th, 2011 at 08:10:49 PM EST
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