Evidence for the Monetary View of the Eurozone Crisis

Some observers argue that the current problems in the Eurozone are actually the result of a monetary crisis not a sovereign debt crisis.  They acknowledge there are structural problems with European currency union but point back to the failure of the ECB to stabilize and restore nominal spending to expected levels during the crisis of 2008-2009 as the real culprit behind the Eurozone crisis.  This failure to act by the ECB–a passive tightening of monetary policy–has been devastating because it means nominal incomes are far lower than were expected when borrowers took out loans fixed in nominal terms.  European borrowers, both public and private, are therefore not able to pay back their debt and the result is a fiscal crisis.

Πηγή: macromarketmusings.blogspot.com

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