<blockquote>'As we have often pointed out in these pages, to our mind the euro area crisis is not a currency crisis. It is primarily a debt crisis; a crisis of the bloated European welfare states and the fractionally reserved and way overextended banking systems they harbor. Due to the supra-national status of the central bank it is no longer possible for member nations to simply 'paper over' their economic policy mistakes and so their errors have been revealed for all to see. Instead of being able to surreptitiously impoverish the citizenry by means of inflation and devaluation, the political classes have been forced to face facts.
..
..It is worth noting that there is a great reluctance among policymakers to properly diagnose the causes of the bust. The culpability of the banks and the ECB in fostering a massive credit expansion is rarely discussed. No-one wants to abandon the essential features of the current monetary system – therefore a repetition of the boom-bust sequence is practically assured should the crisis pass with the euro area intact.
We leave you with two apposite quotes by Ludwig von Mises:
<blockquote> “If it were really possible to substitute credit expansion (cheap money) for the accumulation of capital goods by saving, there would not be any poverty in the world.”
(from 'Planning for Freedom')
“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.”
(from 'The Theory of Money and Credit')</blockquote>
- Acting Man,
Should Austrians Embrace the Euro? June 25, 2012</blockquote>
Context<blockquote>
'..Like monetarists, Keynes held no capital theory .. the role time plays..' - Jesús Huerta de Soto</blockquote>