|A Modern Money T shirt comments on the effect of the euro on the EZ countries.|
The alternative is for the European Central Bank (ECB) to act as the lender of last resort and allow a measure of reflation (a bit of inflation) to counter the devastating deflationary effects of austerity. Germany will not allow it. Either Germany does not understand or does not care that its relative affluence comes at the expense of the peripheral EZ countries. Germany has benefitted from exports to the other EZ countries and, in the process, drained their wealth away. That is what happens to countries with constrained, non-sovereign currencies. They can go broke, they have, and the flawed European Monetary Union is threatened with extinction or long-term hardship for its citizens.