Friday, April 30, 2010

Question of the Day

. Friday, April 30, 2010

Via Double-D (not the sandwich with no bread):

If you put Oliver Wendell Holmes ("the First Amendment does not protect the right to shout 'fire' in a crowded theatre") and JM Keynes (describing Treasury anti-inflation policy in the 30s as "crying 'fire, fire' in Noah's flood") together, does that mean that German politicians talking about the inflationary consequences of a Greek bailout are shouting "Fire!" in a flooded theatre?

To be semi-serious: No. Well, maybe. Alright, fine: yes.

But surely the biggest concern of German politicians and voters isn't inflation? Right now the front page of Der Spiegel has plenty on the situation in the eurozone, but no mention of inflation.

Oatley offers an answer:

But why would the Germans fear inflation from lending to Greece? The whole reason for the German/IMF-funded loan is because the Greeks can't monetize their debt via the ECB. Isn't it?

The issue with the Germans is whether the Greeks will pay them back or whether they will be left having to pay it back themselves along with their already substantial debt.

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Question of the Day
 
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