'..the idea that inflation is the magic elixir that turns bad economies into engines of prosperity is pure snake oil.'<blockquote>In a
recent column, Paul Krugman says that Europe essentially is committing "economic suicide" with its various "austerity" programs, with the only thing that can save the Continent being inflation. While I can agree with him in part that "austerity" programs as outlined by the European Central Bank can be harmful to economic growth, the idea that inflation is the magic elixir that turns bad economies into engines of prosperity is pure snake oil.
..
There is an underlying issue that Krugman cannot see because of his anti-enterprise ideology. For many years, Europeans have looked down their noses at the USA because it has not had the same restrictions on businesses as Europe and the USA's welfare state is not as vast as that on the Continent.
Yet, such restrictions and heavy spending have made it more difficult for businesses to generate real wealth, which ultimately has translated into slow growth and high unemployment. Unfortunately, the current spate of "austerity" programs fails to recognize how new wealth can be created and what it really would take for Europe's economies to grow.
Krugman, however, would have none of that. His message to Europe is simple: keep the restrictions on business in place, increase government spending, and print money, lots of money. Such actions in the present might mask the underlying problems, but in the long run, it would be disastrous.
But to Keynesians such as Krugman, it doesn't matter. In the long run, all of us are dead.'
- William L. Anderson,
Will inflation save Europe? April 18, 2012</blockquote>
Context<blockquote>
'..inflation cannot be considered as a way of life and that it is imperative to return to sound monetary policies.'The Anti-Capitalistic Mentality of the New York Times, May 18, 2012
(Full Reserve Banking) - '..tackling deficits.' - '..work rule reforms and pension reforms, not higher taxes..'' However, the required reserve ratio in the euro area is not 5.4% – it is only 1% (!). .. Still, a bank run that gets out of hand will soon reveal the vulnerability of a fractionally reserved system, even one that is backstopped by a central bank and has not yet expanded fiduciary media to the full extent legally possible.'
- Acting Man (
Source, May 16, 2012)</blockquote>