Yet European policy makers seem determined to blame the wrong countries and the wrong policies for their plight. True, the European Commission has floated a plan to stimulate the economy with public investment — but the public outlay is so tiny compared with the problem that the plan is almost a joke. And meanwhile, the commission is warning France, which has the lowest borrowing costs in its history, that it may face fines for not cutting its budget deficit enough. What about resolving the problem of too little inflation in Germany? Very aggressive monetary policy might do the trick (although I wouldn’t count on it), but German monetary officials are warning against such policies because they might let debtors off the hook. And so, bad ideas continue to prevail and wreak their havoc. And as long as the European elite buy into them, the damage will continue. When, Krugman wonders, will reality intrude?
Posted on: Tue, 09 Dec 2014 05:50:42 +0000
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