NPR had a useful piece on the limited retreat from austerity in the euro zone now that the policy has been shown to be a failure. However the piece likely left readers with the impression that there were/are no alternatives to austerity.

This is of course not true. The European Central Bank could have supported an aggressive policy of fiscal stimulus led by Germany and other countries with trade surpluses. This would have boosted the economies of the euro zone as a whole.

It is arguably true that such a policy was not possible for political reasons. Germans have an aversion to inflation which they regard as the root of all evil. They refuse to consider the possibility of a higher inflation rate as a way to boost growth and re-balance the euro zone in the same way that creationists in the United States will refuse to allow evidence for evolution to change their views on human origins.

This irrational approach to economics by Germany, by far the most important country in the euro, many in reality limit the political options. However this piece should have made that fact clear to listeners rather than leaving many with the impression that there is some economic reason that the people of the euro zone countries need to suffer through years of high unemployment.

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