Weak Euro

Spanish Economy Contracts More Sharply – WSJ.com.

The weak euro is good for Germany, because its exports suddenly become cheaper in foreign currency terms leading to more sales. Unfortunately for the periphery with their trade deficits, a weak euro is bad because it causes inflation. The weak euro means that oil, among other imports, will now rise in price in euro-terms.

Inflation combined with mass joblessness, and this is commonly known as “stagflation.” The last appearance of stagflation in the US was the late 70’s. Let’s hope that the Chairman remembers the 70’s and acts accordingly.

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