Believe it or not, but Berlusconi makes sense on the euro

Here is from Bloomberg:

“Former Premier Silvio Berlusconi said Italy should say “ciao, euro” if the European Central Bank doesn’t start printing money to tackle the debt crisis and Germany should quit the single currency if it won’t back a bolder role for ECB.

“The economic crisis can’t be solved” in Italy, Berlusconi said in comments posted on his party’s website today. He called on Prime Minister Mario Monti to “change his political line” and lobby European leaders to back a money-printing campaign by the Frankfurt-based ECB. If the central bank doesn’t become a “lender of last resort,” Italy should say “ciao, euro,” the former premier said.

The media tycoon-turned-politician became the latest European leaders to step up pressure on German Chancellor Angela Merkel and the ECB to permit a more aggressive response to the region’s debt crisis. Monti yesterday called on Merkel to drop her opposition to allowing the euro region’s rescue mechanism to lend directly to banks.

The 17-nation euro area “has a significant risk of breaking up” unless policy makers revamp the bloc’s fiscal and economic ties, Economic and Monetary Commissioner Olli Rehn said today in a speech in Helsinki. “We’re either headed for a deterioration of the euro area or a gradual strengthening of the European Union.”

Berlusconi, 75, who resigned as premier in November as Italian borrowing costs surged amid a worsening debt crisis, said Italy should remain in the European Union even if it exits the euro. He added that another of his proposals was that the “Bank of Italy prints euros or our own currency.”

“It’s a crazy idea of mine,” he said, without specifying if he meant reviving the lira.

On May 25 Berlusconi, who heads the party with the most seats in the Rome-based parliament and whose support is crucial for Monti’s government, called for an overhaul of the country’s constitution to strengthen the powers of the president. He also said he would seek the office if his party requested him to.”

What can you say? I am no great fan of Berlusconi, but so far the euro establishment’s ideas have failed to curb the crisis so why not try something that actually worked for Sweden in the 1930s? I am not sure what Berlusconi has in mind, but monetary easing is what Europe needs and we need it now.

Leave a comment


  1. dwb

     /  June 2, 2012

    its truly a strange upside-down technicolor strange world when i find myself agreeing with Berlusconi.

    print some Berlusconi Bills, hand them out like (er) money!

  2. rob

     /  June 2, 2012

    This worried me.

    Berlusconii would like the Italian economy to be healthier. He would also like the freedom to print money as it would allow him to fund the state-sector.

    From a MM perspective printing money to fund the state sector will still increase NGDP and give the economy a boost but beyond that b will not the increased-size of the state sector start to be a drag on the economy ?

    I would like MMist to be much more purists on this and emphasize that increased NGDP must come via market-orientated policies and not just via the kind of state-friendly money-pumping activities likely to be supported by corrupt politicians.

  3. Rob, I do agree that that we should be “purists” in terms of stressing market based policies and rule based monetary policy. As you know I am extremely skeptical about discretionary monetary policy and I have again and again stressed that we should not call for “stimulus”, but rather for ruled based monetary policy.

    However, I must also say that if the two is between two discretionary monetary policies – one to deliberately to reduce euro zone NGDP (the present policy of the ECB) or one to “print more money” then I was surely choose the later.

  4. It’s not good news for us when the biggest supporter of Market Monetarism in Europe is Berlusconi.

  1. The reason Mario Monti is beginning to sound (very) desperate « The Market Monetarist

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