Subject: A Non-growth agenda for the eurozone
Date: Tue, 10 Apr 2012 15:47:00 -0400
I was disappointed in your lead editorial today in which you call for more monetary easing by the European Central Bank and more infrastructure spending as a means to overcome the eurozone crisis and especially high unemployment. These policies will have the opposite effect. Your call for "demand management" is based upon the fallacious Keynesian concept that attempts to refute Say's Law. Keynes himself "borrowed" (without attribution, which was typical of him) his discredited "inadequate demand" theory from Thomas Malthus, whom early nineteenth century economists considered to be an economic quack. Printing more fiat money merely robs the purchasing power of those already holding euros, and using these new funds to stimulate spending and drive down interest rates will cause savings to fall. What the eurozone economies need is to replenish its capital stock, which was squandered in an orgy of government wasteful spending. The only way to do this is by increasing savings. Just as any household must postpone spending when it runs out of money, even for things that it considers very important, governments must postpone spending plans, too. Europe needs to cut spending, reduce regulations, cut taxes, and return to sound money. This is the formula that always works, and it will work again.