Sunday August 9, 2020

Europe’s sinister fairytale: it may sound like something from the Brothers Grimm

But the Eurozone’s situation cannot be resolved with magic spells of fiscal and monetary policy

6th March, 2016

When all the little economists are being tucked into their beds at night, to ward off bad dreams, their elders tell them a fairytale. When economies experience downturns, so the tale goes, governments have two magic spells to make the bad downturn go away.

The first spell is fiscal policy, using taxes and borrowed money to buy more stuff, build more stuff and encourage the economy into motion again.

The second spell is monetary policy,...

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