Time for the EU to print money?

[BrilloPad]

Crisis stalks Europe again as deflation deepens, Germany stalls - Telegraph

I suppose at least there is no chance of another Weimar.

[scooterscot]

The dangers of deflation are so poorly understood. We only seem to worry about inflation.

Were the housing bubble Mk II in the UK to come to fruition with an increase in interest rates we'd soon quick sharp understand the deflation dangers. But'll never happen. Oh no.

[Zero Liability]

It's done nothing but goose up stock markets and stimulate short lived asset bubbles everywhere else, with a market hanging off the words of professional conmen known as central bankers, so sure, why not? I think people obsess over highly manipulated statistics, like 'job growth' or GDP, too much.

Many economies in the EU have massive spending problems, that largely arose from bad regulations favouring sovereign debt, overly low interest rates/cheap money and wasteful spending/over-regulation in general. I fail to see how more of the same will do them any good.

The dangers of deflation are so poorly understood. We only seem to worry about inflation.

Were the housing bubble Mk II in the UK to come to fruition with an increase in interest rates we'd soon quick sharp understand the deflation dangers. But'll never happen. Oh no.

Which just highlights that the whole reason deflation is an issue is excessive subsidisation through credit expansion and other means, and reliance on debt. Deflation is a correction of this and simply printing more will compound the eventual problem. So the inflation that spawns the eventual deflation is as much a problem.

[BrilloPad]

The dangers of deflation are so poorly understood. We only seem to worry about inflation.

Were the housing bubble Mk II in the UK to come to fruition with an increase in interest rates we'd soon quick sharp understand the deflation dangers. But'll never happen. Oh no.

And yet inflation has never caused any harm.

Though in my book deflation is not bad either. If it encourages people to save it can't be all bad.

[Zero Liability]

It has destroyed entire economies in its extreme forms and results in on going loss of purchasing power. It causes nothing but harm. It's a hidden tax.

The reason governments favour it, aside from the advantages accruing to the first recipients of new money, before it loses its purchasing power, is that they are the biggest debtors out there. So if they can't repay their debt/default formally, printing money is a way out. The deflation everyone is so worried about is more accurately identified as credit contraction. Again, it wouldn't even be on the radar without credit expansion to begin with, and neither is really a good means of monetary 'management', to the extent that such a thing exists.

[MicrosoftBob]

Crisis stalks Europe again as deflation deepens, Germany stalls - Telegraph

I suppose at least there is no chance of another Weimar.

You could hedge your bets and stockpile wheelbarrows

[scooterscot]

Though in my book deflation is not bad either. If it encourages people to save it can't be all bad.

Yes. And when people are saving they're not spending. And when the purchase of products & services drops as a result the economy is stuffed. You'll see. Businesses go bust quick sharp.

[suityou01]

Crisis stalks Europe again as deflation deepens, Germany stalls - Telegraph

I suppose at least there is no chance of another Weimar.

Those Russian sanctions should be the final straw.