> The ECB should just do more QE

To be fair, the ECB has been saying as much. Portugal, Spain, Italy and Greece have needed to make structural changes to their labor markets, pension benefits, and tax and regulatory systems for years. Unfortunately, their voters prefer things like screaming at Macedonia about what it calls itself [1].

[1] https://www.theguardian.com/world/2018/jun/17/macedonia-gree...

Those "structural changes" are called austerity and they have not worked well where they have been tried. There is a very strong argument that the Euro currency is deflationary and is causing many of the various issues like unemployment, government debt crises, etc. See Stiglitz's book The Euro for an in depth argument.

Or just look at the unemployment statistics. https://www.statista.com/statistics/268830/unemployment-rate... The countries outside of northern Europe that are on the Euro or pegged to it have much higher jobless rates than those with their own currency. Czechia, Romania, Poland, Hungary are not pegged while Bulgaria, Lithuania, Estonia are. Similarly outside the EU, Bosnia is pegged and doing poorly, Iceland is not and doing fine even though they were very hard hit by financial crisis.

It's exactly analogous to the way the fixed gold exchange rate was deflationary during the Great Depression and as soon as countries dropped the gold standard they started recovering.

> Those "structural changes" are called austerity

These terms have wildly different meanings depending on the context. In my use, structural change refers to revenue-neutral economic rule making. Austerity means deficit reduction.

Making it easier to hire and fire employees is a structural change. Making it cheaper to form a new business, or increasing funding to courts, is also structural change. Removing requirements that e.g. hairdressers be licensed [1] is another. Some of these measures may actually increase deficits, at least in the short term.

[1] http://thefederalist.com/2015/07/15/texas-supreme-court-stri...

Finland vs Sweden is the ideal example:

https://i.imgur.com/dooDKYT.jpg

If Finland had controlled their own currency, they could have made adjustments based on their unique circumstances. Instead they were left to suffer through a miserable near decade long rolling recession.

It's not so much that adjustments are made. It's more that when exports fall, the currency falls with it automatically, which helps for exports. In short, a floating currency helps regulate the import/export balance. Not having a floating currency means you need wage renegotiation and a lot of manual processes to achieve the same.

Note that in the time period there's also Nokia mobile dying, which impacts the numbers a bit.

Currency control is good to have, but I think it's also a kind of patch, not a fix.

As a Southerner, I think we do need structural changes; unfortunately, as you write, these are usually a code for austerity and job precariousness, whereas the changes we need are at the top level, not bottom. In government, major companies and even many small ones. We have hard-working and qualified people, who are wasted by the corrupt and incompetent.

It certainly solved a lot of problems, the US is at full employment now. It took over a decade for interest rates to start ticking up with the exception of the housing market and stocks. The money supply is only one factor in inflation, velocity is the other and it has been extremely low for a long time.

Some EU countries are at more or less full employment too. I wonder how long that will last.

What the article does not mention is that of course many people from Southern Europe have migrated north to find work. We now see for example young people from Spain coming to Eastern Central Europe (V4 countries), I think that's happening for the first time in history.

Inflation is rampant in many areas right now. It’s dishonest to claim inflation is low because TVs are still cheap when house prices, healthcare, and education are exploding. Furthermore, if the unemployment rate was as low as is advertised we would be seeing wage growth. The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”.

> if the unemployment rate was as low as is advertised we would be seeing wage growth

Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR).

[1] https://fred.stlouisfed.org/series/LES1252881600Q

But that increase in wages does not seem to be keeping up with inflation, which translates to a net loss for the average person.

http://www.inflation.eu/inflation-rates/united-states/histor...

> that increase in wages does not seem to be keeping up with inflation

In economics, the "real value of a good or other entity has been adjusted for inflation" [1]. The statistic above is thus inflation adjusted. Nominal wages (i.e. those not adjusted for inflation) are up close to 30% between May 2007 and May 2018 [2], or 2.3% per year [3].

[1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco...

[2] https://fred.stlouisfed.org/series/CES0500000003

[3] (26.9 / 20.84) ^ (1 / 11) - 1

Are housing, healthcare and education costs included in the inflation numbers?

> Are housing, healthcare and education costs included in the inflation numbers?

Yes, CPI includes housing, healthcare and education. The only measures commonly stripped out are food and energy, to exclude commodity volatility; that measure is presented as "core inflation" and is more useful when considering things like interest rates than real wages.

You’re wrong. House prices aren’t included anymore in CPI. Imputed rents are. These are very different things.

Anyways, I’m sure all this falls on deaf ears. If you used the same calculation the Fed used in the 80s to measure inflation we’d currently be at 10%. You can pick and choose and weight whats in the cpi basket to get any number you want and the government is incentivized to make it appear lower.

> House prices aren’t included anymore in CPI. Imputed rents are

CPI calculates something called "owners’ equivalent rent of residences" [1]. This is reasonable as nobody purchases a new house every year; instead, one "uses" a portion of the home value over time. When house prices go up, this measure goes up by a similar measure.

Housing was put into CPI in 1954, when it was included as a user-cost item. It was replaced in the early 1980s because user-cost methods include "ex ante expected gain" while usage pricing "includes actual ex post realized capital gains on the house" [1].

> If you used the same calculation the Fed used in the 80s to measure inflation we’d currently be at 10%

Well, yes. You'd be excluding everything invented since 1980, e.g. all modern technology. We don't spend the same fraction of our budget on hams and eggs, as the 1980 definition measured, and most people have health insurance costs now.

If someone insists on living like it's 1980, I suppose observing the old metric would be perfectly valid.

[1] https://www.bls.gov/opub/hom/pdf/homch17.pdf page 104

[2] https://www.brookings.edu/wp-content/uploads/1980/06/1980b_b... page 558

> When house prices go up, this measure goes up by a similar measure.

That’s only true if you assume interest rates aren’t falling. Artificially low interest rates have inflated the actual price of housing while keeping monthly payments fairly steady.

The Fed is then able to say “look, no inflation!” despite actual prices rising very rapidly.

> Artificially low interest rates have inflated the actual price of housing while keeping monthly payments fairly steady

There's a case to be made for each approach. Given we have excellent ways of measuring house prices, but no great ones for cost of living, having CPI measure the latter and thus usage--instead of user costs--seems reasonable. (We don't include stock appreciations and declines in inflation, for example.)

Those interest rates didn’t fall over the past decade, they stayed very consistently low, so the rise in house costs caused a rise in mortgage payments and imputed rents.

It does not seem necessary to ascribe racism as a motivation to a very large group of people who you don't know. Especially when the second sentence of your second point is spot on and can easily stand on it's own.

Given the outcome of things, it seems very disingenuous to pretend that it wasn't a part of his election.

What outcome? You think enforcing border security and enacting a travel ban on countries identified by the Obama administration as terrorist threats somehow shows racism was a significant part of Trump's election?

Those are common sense policies for most people and have nothing to do with racism. Law, order and regimented immigration processes are not racist, though people who want open borders for the express purpose of "making America brown" most definitely are racist. You should check your biases.

Maybe Clinton was just a terrible candidate and Trump was on the right side of many policy issues? No, that couldn't be the case at all. Must be the racism.

It's also dishonest to claim that inflation is rampant and that the unemployment numbers are fudged.

Governments always fudge employment figures and inflation lol

You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods.

> Governments always fudge employment figures and inflation lol

Some governments might, but governments actually need this information for planning, so ones with even modest levels of transparency are unlikely to do much of it, because it would be too easy to detect if it wasn't the only count, and because it would foul their own planning if it was.

> You just define your inflation metric to suit normally by ignoring things that have gone up more eg housing and including things that are deflating like say TV's and white goods.

Yes, one could in theory do that, but what country specifically does that (with citations to specific supporting information)? Many countries report many different inflation indicators some designed to isolate particular contributions that add noise (either because of high seasonality or high-but-irregular volatility), but they tend to also have measures which include those figures, which tend to be the main figure.

No offence that's very naïve

"Governments always fudge employment figures and inflation lol"

Citation needed.

Thatcher's tory government encouraging doctors to put long term unemployed on disability is well known in the UK.

An the inflation that's direct from some one who works in the ONS in the UK

I think people may be missing that the parent comment is sarcastic.

I caught that, but it makes for a terrible post and so I’m downvoting it

> Monetary policy solved all the US’s problems following 2008

I think "all the US's problems" is a pretty extreme stretch. Monetary policy may have prevented a worst case depression scenario but the economy is still wildly unbalanced. Assets re-inflated but wages did not and there's still far too much private debt.

> Monetary policy may have prevented a worst case depression

I vehemently disagree with this claim. The central banks of the world have merely masked a massive default on debt by inflating it away in a coordinated manner. The owners of that debt made out like bandits while the rest of us paid for it through the devaluation of our savings and wages.

There always are people who vehemently disagree. Read Tim Geithner's memoir "Stress test" and his fights with the "fundamentalists". Luckily he won enough of the arguments and the bail outs meant that the US recovered more quickly than those economies who kicked the can down the road.

The alternative is allowing everything to crash. The rich bankers wouldn't have had a problem, but millions more everyday workers would have paid a far higher price in terms of unemployment.

Honest question: don't the rich also lose during a global crash?

If you are rich you have a number of advantages in a crisis of any sort, global or personal. If you are rich you can diversify your assets away from property and cash - into commodities, stocks, bonds, art, luxury goods, gold and so on. If you are rich you can loose significant percentages, even the majority of your net worth and not worry. This allows you to have liquidity when assets are very cheap, at the bottom, and then you can get those assets! In a crisis there is more bad luck about, poor people are wiped out by a drip of bad luck, rich people need a big dollop, only a few people get a big dollop of bad luck. Only the tail of the distribution of rich people are wiped out, the tail of poor people don't.

Sure, but if you go from a net work of 7 million to a net worth of 3 million, that's a different type of loss than going from a net worth of ~250,000 to a net worth of ~0 because you lost your house and are in debt up to your eyeballs.

Actual rich people benefit. Highly leveraged “rich” suffer.

I have an acquaintance who is a big landlord. The housing crash was literally the best thing that ever happened to him. He literally bought dozens of properties all of the place because he sits on big piles of cash and has generous credit lines backed by his cash flow.

My guess is that he spent about $10M and netted at least 3x from the 2008 crash.

Depends on their reserves vs active business investments and if stability can be maintained. Recessions are good for people with liquid reserves and sufficiently unaffected supporting ability as they can acquire assets at fire sale prices and then reap profits once recovery comes. It sounds exploitative but serves a useful function as without them the liquidating party would be extra screwed.

Not really. They don't lose their houses, their families aren't at risk of not eating, except in rare cases.

The rich win in either scenario. In the bailout scenario they pocket most of the froth. In the crash scenario hyper-deflation causes cash to increase vastly in real value, allowing the rich to swoop in and buy up everything that isn't nailed down at a massive discount. They then get to ride everything back up as the recovery takes hold and pocket most recovery gains.

What the EU is actually proposing is to encourage more migration within the EU. The EU has very abysmal levels of intra-EU migration, around 1/10th of that of the US. Because of this, you have areas with a lack of jobs and other areas with a lack of labour.

I would imagine part of the difference is explained by the fact that if you move within the US you'll still encounter the same language and similar culture. If you move from one EU country to another, odds are you'll encounter a different language and culture, so moving intra-EU is a much more difficult proposition.

Very true. The Netherlands needs a TON of healthcare workers right now. But you can't just hire someone from Greece or Spain who doesn't speak the language.

It depends I guess. Does a surgeon or anesthesiologist have to know Dutch to be successful? Or even a dentist? Btw the Netherlands has quite a few people who don't speak Dutch at all..

Southern Europeans usually don't speak English very well either. So there's no easy solution.

Well yes they do. My English is pretty decent, but I think most people would have problems having technical discussions about their health in English. Imagine a 70 year old with dementia in a nursing home. Miscommunication in healthcare costs lives.

Yes, (by far) most people want to be able to talk to their surgeon or dentist.

We also have a severe lack of housing in Germany right now mostly due to this intra-EU migration. It's good they all found jobs here, but if you are in the market to rent right now it sucks hard, especially at the lower end. This needs better management.

I don't see how that is not a good thing. It should theoretically spark the building business?

It's like complaining that your company has to many customers.

>It's like complaining that your company has to many customers.

Well, management accepting more orders without enough people/space to do the work can be a pain.

It's bad for the customers who are not being served something they require to live normally. If my company was the only one making food and we had too many customers, that would suck hard, no?

The market is too slow too and hindered by many things (which make sense otherwise but are a problem here).

You don't see how that is bad for people in demand of living space right now / in the near future?

The problem is not some kind of financial malaise or shock that requires 'confidence' to recover - ergo - a financial solution to a non-financial problem is not likely optimal.