Friday, December 3, 2010

The Economist misleads the Yglesias blog

Dunno who writes these things, but the logic is off base. He first points out that inflation is higher in nations under financial stress in Europe, then says this must be wrong because his theory says inflation should be higher in Germany.  Wrong?  The peripheral nations are at the retail end of production, the volatile end, that is why we call them peripheral.

Start with the obvious assumption before deviating into the bang-bang theories. The obvious idea to rule out is that European nations under debt stress are precisely the nations under resource constraints suffering inflation, not Germany! It is likely that peripheral nations always suffer more inflation relative to the center because they are Whiplashed!

Now Yglesias is telling his crowd that more Euro pumping creates real stable growth in peripheral nations, not volatlity!  .

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