Is Euro Area Moving In The Wrong Direction?

Sorry about the lack of posting recently, but I have been busy. I will soon post an analysis of Thomas Piketty’s theories.

Meanwhile, I can see that there is increasing pressure on the ECB to ease because the euro area has seen a continued drop in inflation, to 0.5% in May.

Yet it doesn’t seem to do any harm as unemployment is also falling in the euro area.

Nor does it seem to harm debtor countries as nominal bond yields have dropped much more than inflation. And besides, inflation isn’t as good for debtors as is commonly assumed.

So what the recent upswing instead illustrates is that disinflation isn’t harmful.


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