Super Mario’s Easy Money Drags Down Growth

Europe’s Energy Costs See Biggest Two Month Jump Ever | ZeroHedge.

Europe is heading for stagflation. A weaker euro is pushing energy prices to 2008 levels, but the weak euro is not stimulating exports because world growth is slowing.

My economics professor in the 80’s taught us how rising oil prices in the late 70’s changed the supply curve of virtually everything. Expensive oil made everything else more expensive so that less goods were supplied at each price point.

The reason why market interventions eventually fail is that there are always unintended consequences. In the case of Europe, cheap money is temporarily keeping Greece and Spain afloat. The unintended consequence is that the cheap money is eroding the purchasing power of the euro, which is leaving regular people worse off.

 

 

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