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2012-11-01

The euro is heading for a permanent state of depression - Telegraph

The old system of free-floating sovereign exchange rates wouldn’t have prevented austerity, all other things being equal.

But what it would have done is allowed the periphery to mitigate the damage through quantitative easing and through the very rapid restoration of competitiveness that devaluation would have brought about.

Devaluation would also have greatly reduced external indebtedness. The creditor would have been made to take the bad debt writedown through the exchange rate.


The euro is heading for a permanent state of depression - Telegraph

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