The austerity that everyone except Germany wants eased is deflation in action. And pretty much every economist agrees that it's disastrous for the countries following those policies; much better would be floating currencies and inflation getting rid of the debt instead.
(In other words, I think you have it almost 100% backwards.)
There is an argument that the fixed and, more importantly, uniform interest rate across the entire zone caused problems.
I personally find the argument even more convincing that it's a wage structure problem. If you look at unit labor costs (essentially wages divided by productivity), then it becomes painfully obvious that Germany has been doing significant wage dumping - their unit labor costs have remained flat, violating the 2% inflation goal.
This caused the trade imbalances that are at the root of the current mess.
These were fairly prominent figures and all of this has been part of the local nationwide political dialogue years before there was any debt/banking/Euro crisis. Nothing happened.
[0] And others, everywhere, I'm sure, but I'm making a statement about Germany here.
Why do people keep saying this? Ben Bernanke does not pocket the profits he makes off the currency. Almost all profits from printing money go straight to the Treasury.
"But now the Government can print money to monetize their debt--" except almost all credible inflation forecasts indicate the Fed isn't printing enough money, so I don't think we need to worry about this.
As for the banking system, the service charge on my bank account suggests they are not doing very well on the whole profits-from-holding-money thing.
Yes, that is huge. Debt-backed currency means someone is profiting off the mere existence of the currency, typically the banking system and government and anyone who owns the government bonds backing the currency, but at the expense of everyone else who uses and 'saves' it (that's not really saving).
The given rationalization for that is that a depreciating currency strongly incentivizes people to spend it or invest it instead of hoarding it in their savings accounts, improving economic growth. That's also the argument against a deflationary currency like gold-backed or bitcoin - that the ultimate result is decreased economic activity and growth.
However, that's an argument that grew out of an earlier time, when the world was less connected and dynamic. I suspect that a deflationary currency is much less of problem in our modern world, where economic activity happens at the speed of light and electricity and almost the entire world is integrated into a common market and economy.
In that world there is already huge incentive to spend an invest, and while a deflationary currency would represent a significant change, I don't think economic activity would ground to a halt under a deflationary currenncy.
In fact, the problem we're now seeing in the US and Europe is the opposite - too much incentive for borrowing and spending, not enough incentive for capital formation, eg savings. Too much debt at every level of society, from individuals to sovereign governments. I can't help but wonder if a deflationary currency that appreciates in value over time instead of depreciates would provide a higher bar for spending and investment, and alter that dynamic in favor of savings (which also a form of investment, as banks use savings to make loans).
Instead of US government bonds being the risk-free rate of return, a deflationary currency would be. That alone would be a huge economic shift, and might limit governments' out-of-control spending simply by giving investors a stronger alternative to government bonds. If a deflationary currency appreciates by, say ~3% per year, then government bonds would have to match beat that to attract investors, forcing governments to borrow and spend with more discretion.
Anyway, yes it definitely is something to think about. It's also probably a pure thought experiment, I don't see governments giving up the risk free rate of return status for their bonds any time soon.