Krugman on European Financial Suicide

[David Morris]

"liquidate labor, liquidate stocks, liquidate farmers, liquidate real
estate… it will purge the rottenness out of the system. High costs of
living and high living will come down. People will work harder, live a
more moral life. Values will be adjusted, and enterprising people will
pick up from less competent people."

Treasury Secretary Andrew Mellon's now infamous advice to Herbert
Hoover, perfectly echoed by today's austerity proponents.

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.