The US government faces the impossible dilemma of curbing domestic inflation ...
...and forcing Corporate America and many friendly governments into a solvency crisis that will threaten America’s own stability.
Things are far worse in the eurozone, where policymakers refused to do the obvious once Europe’s banks had failed after 2008: establish a proper federation’s foundation – a fiscal union. Instead, they let the European Central Bank do “whatever it takes” to save the euro.
Only by poisoning its own money could the ECB keep the euro show on the road.
Today, the ECB owns huge quantities of Italian, Spanish, French, even Greek debt that it can no longer justify holding as a means of achieving its inflation target, but which it cannot renounce without calling the euro’s existence into question.
Money has two natures. Its first nature, that of a commodity that we trade with other commodities, can never explain why money would ever acquire a negative price.
Socialism for bankers and austerity for most of the rest thwarted capitalism’s dynamism, plunging it into a state of gilded stagnation. Poisoned money flowed in torrents, but not into serious investments, good jobs, or anything capable of reanimating capitalism’s lost animal spirits.
Yanis Varoufakis Project Syndicate 21 September 2022
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