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Apart from you.
>What I and others are saying is that Germany needs to either stop short-charging its workers so they can start importing stuff from other European countries, or accept that Germany will never get paid for its exports.<
They could also import from non-euro countries; what then?
>Because there is one and only one way to pay for exports: Through imports.<
Germany is also one of the biggest importers in the world.
<The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.>
But then you are shifting your argument
Then the Euro falls relative to those currencies, until those imports stop. That is why you have a floating currency.
This isn't fucking rocket science.
<The low-wage service sector may be unimportant to the export side (to low order), but it is very important to the import side.> But then you are shifting your argument
No, my argument has always been about current accounts imbalances.
That it comes as a surprise to you that current accounts imbalances can arise from both import suppression and export subsidies speaks to the quality of your knowledge of national accounting, not to the quality of my argument.
- Jake Friends come and go. Enemies accumulate.
That is not true; you have a habit to conflate trade and sometimes even merely exports with CA.
You are assuming quite a lot; but if if you prefer to make my arguments in your head to defeat them, go ahead.
Under an "economic equilibrium" frame it would go something like this:
Then the Eurozone would no longer be in trade balance as a whole so there would be a downward pressure on the exchange rate. The rest of the Eurozone would benefit from the lower exchange rate, and would increase their exports outside the Eurozone, too. Equilibrium (again balanced trade EZ-wide) would be attained at a lower exchange rate. But now Germany would be running a smaller trade surplus and some of the deficit countries a smaller deficit.
Imports would become more expensive and that would lead to some pain, but also for opportunities for import substitution if because of the lower exchange rate production in the EZ became profitable where it was marginally unprofitable before.
Unfortunately, the ECB would react to the consumer price inflation resulting from the more expensive imports by raising interest rates and nipping in the bud any private-sector attempts at investment for import substitution. And the public sector, as we know, cannot do anything meaningful without running afoul of EU "illegal state aid" rules. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
The reverse should be true as well: don't cut rates and blow bubbles just because you're importing disinflation from China. Peak oil is not an energy crisis. It is a liquid fuel crisis.
It's funny how one does not separate different kinds of inflation from each other (in central bank practice).
Central banks like their interest rate management to be based on very very simple rules of thumb.
There is more than one rate of inflation? Wud? <bits of central banker cranium all over the walls>
I think they use deliberately obscure language so as to hide the fact that there isn't much there, there. Also it might explain why they spend all their time admonishing the fiscal authorities on fiscal policy and protesting that nobody else should admonish them on monetary policy. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
As we say in Sweden: det dunkelt sagda är det dunkelt tänkta, "what is unclearly said is unclearly thought". Peak oil is not an energy crisis. It is a liquid fuel crisis.
You know another funny thing the ECB does? If a government raises VAT, they interpret the resulting price rise as inflation, and raise interest rates.
A swedish kind of death:
Riksbanken var oenig om räntebeslutet - Ekot | Sveriges RadioFörklaringen finns bland annat i högre priser på livsmedel och energi, och i Riksbankens egna räntehöjningar. The explanation [to higher inflation] is partly found in increased prices on food and energy and also in the increased interest rates of the Central Bank.Men till det kommer ett problem med att effektiviseringen av produktionen sjunkit, att produktiviteten blivit sämre än väntat. Något som i sin tur delvis bottnar i att det är goda tider på arbetsmarknaden med fler jobb och högre löner.But adding to that is the problem that the efficiency increase in production has declined, the productivity is worse then expected. That in turn is related to the good times on the labor market with more jobs and higher salaries. Det är de problemen som vice riksbankschefen Svante Öberg i redan i december ville stävja med höjd styrränta.These are the problems deputy chairman Svante Öberg already in december wanted to stop by increased interest rate.
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