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dont have to be every years, there are economical cycles
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:48:06 PM EST
[ Parent ]
And right now, the economic cycle requires Germany to have 6-8 % yearly inflation for a few years, so Greece can avoid deflation while the trade imbalance is worked out.

If you don't like that, then you don't like the common currency.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:51:21 PM EST
[ Parent ]
I have nothing against inflation.What ever works.but yes as you point out, the logic of a common currency between Greece and Germany is not very rational and quite painful to manage ;-)
by fredouil (fredouil@gmailgmailgmail.com) on Sun Feb 12th, 2012 at 02:55:31 PM EST
[ Parent ]
From an operational point of view, it's actually extremely easy to manage. The ECB just has to print money in proportion to each member state's internal current accounts deficit, and use that money to reduce the co-pays on deficit countries' regional development funds.

Voila, problem solved.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 12th, 2012 at 02:58:29 PM EST
[ Parent ]
Precisely ~ the logic of a common currency is that since Germany profited from a decade a German banks lending into the Greek bubble economy to generate the purchasing power for German production and employment, as the trade surplus-creating country it bears equal guilt for the imbalance as Greece, the trade deficit-creating country.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Feb 13th, 2012 at 09:58:49 AM EST
[ Parent ]

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