Mutualize European Debt: Round 11 “Get to the Chopper!”


” Do it Now!”

EAT MY BALLS, Steve. First, yes Europe will mutualize their debt in the near future, or the Euro will fail and Armageddon will rein. Second, there is no case in which a pure austerity plan has worked when not in conjunction with a stimulus plan or some other outside financial windfall. Third, the free market does not exist in a vacuum. Without a Central Bank and a strong federalized government or a trading partner with another capitalist state, capitalism wouldn’t work nearly as well as you think it does. The freemarket is like Tom Cruise, sure he looks nice and works hard but I am not going to leave him alone with my kids or my wife.

The role of the Federal Reserve is to stabilize wages and prices and maximize employment; this is often referred to as the dual mandate. The problem is that while it is possible to stabilize prices or maximize employment by themselves it is nearly impossible to do both at the same time. This is why it appears that the Fed cannot create jobs as if it were a anglo-teenaged wizard conjuring up breasts on his flat-chested best mate (look for Harry Potter and the Tits of Hermione on book shelves this Christmas). “create jobs” is a completly misunderstood term in the modern lexicon, let’s say instead encourage private sector growth.

Basically what a government and a Central Bank have to do to encourage private sector growth is incentivize investments in the right areas and discourage investments in others. One way this is accomplished is by lowering interest rates. What’s that you say, they are already near zero? Well, let’s make them negatives. Oh, you think that can’t be done? Well then, what if inflation rises, that would mean that money invested would be devaluing at the same rate it is gaining interest, or worse, faster, thus creating a short term negative interest rate. The only safe place to put money would be in long-term investments in physical and human capital, thus createing growth. However you may have noticed in this model I had to raise inflation, but inflation today is a damn site closer to the Fed’s target (2%) than the unemployment target (7%). But the Fed doesn’t actually raise inflation nor does the market really; this model just runs a higher risk of raising inflation.

The Fed’s current M.O. is to target inflation, over unemployment, hoping that stable wages and prices will eventually lead to increased growth. The Fed has the power to increase employment but it is not willing to if it means raising their inflation target. For one, they will lose credibility and two, fuck, what if inflation raises faster than employment? Hey, what the shit, I thought we were talking about Europe.

These are my last words on the subject. Germany has pledged to save the Euro, and since the Euro can’t stand without a higher level of cooperation in the European economy there is no choice but to mutualize their debt. It’s not the best choice, it’s the only choice. Seriously, spell out for me, Brooklyn Steve, how the fuck the Euro survives without a mutualization? And if you think that the Euro will collapse then tell me what happens next, who will stop runs on banks, who will be able to print and distribute new currency without panic, hording, or rapid inflation? Save the Euro, mutualize debt, and unite Europe, it’s the only way.

Of course there are those who don’t want to because it is not profitable for them or it goes against their ideology, but being a player in the global economy means doing things that need to be done. It is Ironic to me to think of Germany in this position, maybe because it was their depression that gave rise to Hitler in World War II tried and failed to bring all of Europe to its knees before him. And now Germany is a economic phoenix that rose from the ashes of despair and austerity to save Europe.

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Dick Sharpe

Dick Sharpe is among that rare breed of men who crawled their way out of the gutter and in to the academic and political elite. Despite this accomplishment, Dick retains his sharpe wit and sense of low-brow humor that makes him such a great contributor to Step Aside Show Blog and Podcast. Although Dick is a wicked charmer, whose sexual exploits are still the talk of Yale, Columbia, and a small town in a northern border province of Iraq, he is also a domesticated man living with with two handsome yet annoying sons and his wicked hot but equally annoying wife in Seattle. Dick is an accomplished academic writer, an award-winning poet and a self-proclaimed wordsmith, a battle-tested Combat Officer of the US Army, as well as a world-renowned alcoholic. Working mostly in the public sector, Dick continues to use his unique set of skills to better the life of his fellow compatriots. Mr. Sharpe’s ideological beliefs are a bit at odds within themselves at times he is strong believer in social programs and liberal rights while at the same time a strong believer in neo-liberal economic policies and the power of the free market to shape the political landscape. Put simple Dick Sharpe is the kind of man men wish they could be, and women wish they can be with, but the truth is they can’t because there is only room enough for one Dick Sharpe in the World.