Krugman on European Financial Suicide

[David Morris]

Inflation can be checked by interest rates.  But interest rates are
zero right now, so money borrowed by government for stimulus is free
(as long as the Central banks don't choke back the money at the first
signs of inflation).  When the economy starts to grow again, inflation
will make those loans easier to pay back.  It's a no-brainer, except
for those who refuse to see (like those who insist stalled economies
are the result of debt,  Those who insist on framing this stalled
economy as the result of lazy debtors, an upside-down morality
mentality). Markets collapsed because of Wall Street's and Bankers'
irresponsibility, not debtors'.

David Morris

On Mon, Apr 16, 2012 at 5:17 PM, alice wellintown
<alicewellintown at gmail.com> wrote:
> Sure, inflate. But the economist doesn't deal with the stake holders.
> Who will be helped by inflation and who will be hurt by it? WE've the
> same case here in the US. Inflate and housing prices will go up, those
> who owe will be bailed out by inflated cheap money payments. This is
> the bail out Morris was asking for, the bail out of the 99% who got in
> over their heads and now want a bail out. Afterall, the banks got
> bailed and so did the auto companies and so on. So why not inflate and
> bail out the home owners? Why not inflate and save the Euro and Spain
> and so on? Why not? Because it's not a win win. It's a win lose. The
> debters win and the lenders lose. Why should the lenders lose? Why
> should those who have saved and invested and lived within their means
> not beyond them, lose out? Inflate the price of my bonds, bonds with
> big coupons and call protection, will fall like rocks. Why should the
> value of my securities drop so that those who owe me the money can get
> out of trouble? No thanks. I'm German on this one.