http://www.bbc.co.uk/news/business-30678218

Maybe there's room on the Kool Aid bus with George on the road to recovery... Fcuk, that's a cartoon waiting to be made!

So a currency, whose members can bail each other out, without having to print more currency is falling against one for a country that has to constantly print new currency, because they keep running out?

I never understood how international currency exchange works...

You, Me and just about everybody else I should think.

You realise that QE isn't printing money because it has run out right?

You realise that the bank doesn't have to actually print the money right?

Lol, was that pointed at me or D?

There. Edited for clarity.

I think we should print the internet to make sure we don't run out of that.

So now the Eurozone is experiencing deflation.

http://www.bbc.co.uk/news/business-30707644

I'm certainly no expert but, while price deflation rarely happens during a recession, isn't recession a very real danger of deflation?

If deflation sets in and spirals, falling prices lead to lower investment, lower wages, falling tax receipts and so on. Debts don't shrink, so households businesses and governments all feel the additional burden at the same time, and living standards slowly decline, causing more deflation. In that sense, a long period of aneamic growth, even if not technically a recession in nominal GDP terms, is really just an insidious alternate form of recession anyway.

The worrying thing is that Britain and America have already demonstrated how to avoid this utterly unnecessary pain (Quantitative Easing to expand money supply and prod inflation, even if that does risk pushing it too far in the long run). The other worrying thing is that QE on a large scale has pretty much failed in Japan, at least partly because the time for QE is before you get the deflation. The Eurozone is running out of time to follow the good example; they might be better off with an oil embargo against Russia to drive up that commodity*.

The good news is that oil is a large part of the deflation, and its falling price is also a form of stimulus package that transfers huge sums of money from the well stuffed pockets of Saudi Arabia to the emptier ones of Spanish Italian and Greek consumers. It might therefore fix itself.



* not intended as an actual policy suggestion.