Getting Deflation Wrong
6 June 2014

¶ At Naked Capitalism, Bill Black compares economic “austerity” to the quackery of bleeding the sick — a discredited practice that serves only to enrich bankers and the rentiers who hire them.

The NYT’s “Draghi as Physician” Simile

The most embarrassing of the five articles begins with this sentence.

“Mario Draghi might feel like a doctor trying to treat a chronically ill patient with unproven medicines.”

There are three vital things that are totally wrong about that sentence.  First, it was the ECB and its fellow troika members that forced the eurozone – as it was beginning to recover from the Great Recession – back into a gratuitous second recession and in several cases a Second Great Depression by inflicting austerity.  Second, the correct medical metaphor would be that Draghi is continuing to insist on “bleeding” the patient a century after we knew that the practice had no scientific basic and harmed the patient.  His practices were not “unproven” – they were known to be quackery.  Third, to the extent the focus is on low inflation, Draghi has been refusing to “treat” the “chronically ill patient” even though (A) the eurozone has repeatedly failed to meet the ECB’s stated inflation target and (B) there are proven fiscal means of curing the “patient” which Draghi fights to prevent from being used.

One Response to “Negotiables:
Getting Deflation Wrong
6 June 2014

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