Nick Rowe:
Worthwhile Canadian Initiative: Darwin Awards, and other random thoughts on the Euro: At root, the coming Eurozone crash, like the 2008 crash, are not caused by a failure of governments, or of finance, but by a failure of monetary systems. Yes, people and governments borrowed more than they should have, and other people lent them more than they should have. But people make mistakes, and do stupid things, and loans go bad. A good monetary system should have the ability to keep the economy functioning even if loans go bad. Nowhere is it written in stone that if a lot of borrowers can't pay a lot of lenders that there has to be a recession and we all stop working and producing and buying and selling and just sit and watch while those borrowers and lenders sort themselves out.
We need a monetary system that keeps on functioning despite human mistakes, stupidity, or asteroid strikes.
The tragedy is that we have such a monetary system--or could have one, if the ECB and the Fed would do what they ought to be doing.
