How can the ECB even think about keeping it all together, with the policies that failed 10 years ago?

There is a lot of talk about the problem of inflation in Italy, and it is absolutely true: citizens are suffering a very harsh punishment for mistakes in the energy sector over the past 20 years and the war is an excuse, or rather, a Kik freeze.

But if you think the situation in Italy is particularly dangerous, we present two graphs from WolfStreet that show how inflation varies within the eurozone:

Inflationary values ​​on an annual basis in June 2022

Although the two extremes are relatively small, Estonian inflation is nearly 4 times that of Malta. Malta and France contained the rise with a strict energy price control policy. Outside the three Baltic republics, Greece, Belgium and Spain are also experiencing very high price variance indicators.

The common market obviously doesn’t work, otherwise we wouldn’t see these kinds of differences. With a non-functioning commodity and energy market, with such large inflation differentials, how can the European Central Bank even vaguely believe that it can implement a common monetary policy? Nor do I touch upon the problem of the debt of individual countries, which, paradoxically, is mitigated by inflation: debt is expressed in monetary terms, and therefore is usually eroded by inflation, even if a recession in the near future certainly will not help.

In such a situation, we will first have to deal with the market, especially transport and energy infrastructure, and then the monetary problems. Instead, the single currency was created precisely with the illusion that it could solve something. In this case, the only possible policy is the losing policy, but it is also the policy that only solves the problem of debt or structural differences. At this point, it would be more appropriate to break the coin, at least for large areas, and let each area solve its own problems.


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