No problem in Europe -- they can print money

I've seen several analyses lately, one in particular on Chris Hayes's show, which claim the financial crisis in Europe is not so bad, because, after all, Germany can print money. Katrina vanden Huevel said printing money is fine, but if they put an austerity requirement on the bailout, it will be counter-productive. In other words, if Greece, Italy, Spain, etc. just spend all the printed money and don't do anything to bring spending under control, all will be fine. I suppose if they get in trouble again in a few months, Germany can print more money. Truly amazing.

Germany has experience with inflation, so surely Merkel's economic advisors are not as ignorant as vanden Huevel.

There will likely be requirements for austerity measures, but there will unlikely be actual austerity. Greece and the southern European nations like Greece are accustomed to government dependence, and now they can quickly grow accustomed to dependency on Germany. Germany will make a big mistake if they bow to pressure and bailout Greece and others. I don't have an easy answer, but printing money is not the answer. Greece and the others will need to do what America needs to do -- implement systemic changes which liberate market forces, then grow their way back to recovery. I think Germany realizes this, but so far I haven't heard anyone state explicitly that free markets are the solution. Like many in America, Europe still believes more statism can cure what statism has infected.

On the verge of economic madness

http://mises.org/daily/5743/Inflationists-in-Wolves-Clothing

This article from Mises warns against the current call for printing money to support demand in the economy. Once again, very smart economists are falling under the illusion that we can defy economic reality. There's a recurring hubris throughout history which always results in a fall, and you would think we'd learn after awhile. I'm not an economist, so I can only guess why previous money inflation hasn't translated into much higher prices. I believe that uncertainty in the business community and fear of unemployment among consumers have dampened investment and spending. I also blieve that smart business-people have learned to not follow all government carrots, so even as government tries to induce investment and spending, businesses and consumers don't trust the government interventions to maintain a long-term recovery. Plus, there is concern about the costs of Obamacare and Dodd-Frank realted to coming regulations, and the regulations which stream for the EPA.

However, if the government persists, and if the illusion of government-backed prosperity is finally embraced because wishful thinking overpowers reason, and if this creates investment and spending at a rapid rate, and if the public and businesses see this as something long-term that they have to have and will fight to maintain, then inflation will destroy value and we'll spiral into collapse, much like happened to Germany before WWII. Those who get the money in the beginning and know how to make money, then shift to avoid the destruction of inflation, will come out great, but the rest of us will be screwed.

My hope is that we hold the course and sane people can win the argument for free market solutions, but this might be wishful thinking, too. The Fed will destroy America if it's not stopped.

Geithner spreads American financial insanity

http://www.washingtonpost.com/business/economy/geithner-us-treasury-secretary-urges-major-shift-in-european-financial-system/2011/09/23/gIQAA5DirK_story_1.html

Timothy Geithner wants Europe to follow America in printing money in order to save the too-big to-fails of the world -- Greece, European banks, Italy, Spain, and so on. Forget about cutting spending, just print more money. Geithner is trying his best to undercut rational efforts to make Europe financially sound -- it's not enough for him to be on the team that has irrationally inflated our money supply, now he wants to be on an international team to flirt with global inflation that places a hidden tax on everyone.