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Home Publications Blogs Beat the Press Is the NYT Prohibited from Discussing Alternatives to Austerity?

Is the NYT Prohibited from Discussing Alternatives to Austerity?

Monday, 17 January 2011 10:55

The NYT reported on the austerity agenda being imposed across Europe:

"governments must get their costs down by reducing wages, compensation and income, while cutting spending and raising taxes."

That's all a very good way to make a downturn even deeper, slowing growth and raising unemployment. Of course European governments actually do have options.

They could leave the euro. Yes, the process would be disruptive, but it likely promises a much better growth path than the path prescribed by the geniuses of euro austerity. The Argentine 2001-2002 default/devaluation is the model here. Of course the threat of Ireland, Spain, Portugal, Greece and other troubled economies leaving the euro may be sufficient to prompt the core euro nations and the European Central Bank to adopt more expansionary monetary policy, which would be the best possible outcome.

However, it is bizarre that that the NYT would devote a lengthy piece to a discussion of European austerity without even mentioned the opt-out option. This is certainly being discussed by many Europeans.

Comments (7)Add Comment
Sovereign Fiat Money is the Problem, Not the Solution, Low-rated comment [Show]
Return to gold and barter goods?
written by Rick, January 17, 2011 2:13
"Once the Fed is out of the picture, there won't be any more funny fiat money with which to play stimulus games - just a return to the gold and barter goods that produced full employment stability in the past. "

Ahh, yes!! The halcyon days before paper money and the fractional money system. I'll trade you two dozen eggs for a gallon of gas. What? You have too many eggs? Hmm. Don't have enough gas to go get you a cord of firewood. Would you take an IOU? My bank says I have enough gold in my deposit box to cover it.
Subsistence living always was a full-employment task.
Germany needs higher interest - others lower
written by Peter T, January 17, 2011 4:56
The German magazine Spiegel writes in its recent online edition that prices are increasing in Germany now on a broad front, not only food and gas, but also rents. The normal response of the central bank would be increasing the interest rate, which is not what the states on the EU periphery need.
Sticking to the Scrip
written by KadeKo, January 17, 2011 5:10
Otherwise employers would just bypass money and pay workers directly with barter goods

How about Pullman Bucks? I understand they were very popular in the late 19th century. Whatever happened to them?
written by KadeKo, January 17, 2011 5:26
(Oops. Otherwise employers would just bypass money and pay workers directly with barter goods should have been italicized as a quote.
We are all chicken farmers now
written by dopp, January 17, 2011 6:38
Very good, izzatso. As Sue Lowden informed us, the accepted payment for physician services in Nevada is two chickens. We'll need a lot more chickens once fiat money is eliminated.
Argentina as model
written by KS, January 18, 2011 8:53
"The Argentine 2001-2002 default/devaluation is the the model here." I would simply note, as I have a few times in the comments section here, that the conditions contributing to Argentina's growth following default and devaluation included restructuring the debt on hugely favorable terms (~32 cents on the dollar) and a boom in international prices for the country's leading exports. Are these conditions likely to be replicated in the case of European periphery countries defaulting and leaving the Euro? I'm skeptical (though obviously the question would have to be addressed on a case-by-case basis).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.