In Eurozone it is neither inflation nor deflation, it is confusion.


One can’t fail to notice that the EU financial officials are in a state of confusion regardless whether the economic zone is experiencing deflation or inflation. They are in state of confusion and all because they have got not clue what deflation and inflation is. And these people are in charge of the economic lives of hundreds of millions of people. I weep for Europe.

On the same day two finance ministers from European countries of Spain and Luxembourg make statements that they see no deflation and no inflation:

ECOFIN:Spain Fin Min:Not Worried About Deflation In Euro Zone

Wall Street Journal. July 06, 2009.

BRUSSELS (Dow Jones)–Deflation isn’t a risk in the euro zone even though an economic recovery may take a year to emerge, the Spanish finance minister said Monday.

Elena Salgado said she isn’t worried about sustained deflation in the 16-member euro zone, where consumer prices fell for the first time ever in June.

Economic growth in the currency union was unlikely until 2010, she added, speaking on the sidelines of a meeting of European Union finance ministers in Brussels.

ECOFIN: Luxembourg Min: No Real Danger Of Euro-Zone Inflation

Wall Street Journal. July 06, 2009.

BRUSSELS (Dow Jones)–There is no real danger of inflation in the euro zone, Luxembourg Economy Minister Jeannot Krecke said Monday.

Some investors are concerned that record-low interest rates and both monetary and fiscal stimulus in the euro zone will push prices up quickly, even though falling oil prices since last year have caused the euro-zone consumer price index to swing to deflation for the first time ever in June.

“So far, I think there is no real danger [of inflation] and I think most of the ministers think the same thing,” Krecke told reporters on the sidelines of a meeting of European Union finance ministers.

If the European economy has finally reached a state of perfect equilibrium within itself, perhaps it is just the right time to get rid of Central banks over there that cause inflation.

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