What we’re actually seeing, however, is complete inflexibility. In March, European leaders signed a fiscal pact that in effect locks in fiscal austerity as the response to any and all problems. Meanwhile, key officials at the central bank are making a point of emphasizing the bank’s willingness to raise rates at the slightest hint of higher inflation.
So it’s hard to avoid a sense of despair. Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy — and their society — off a cliff. And the whole world will pay the price.
There’s the classic definition of insanity — doing the same thing over and over and expecting different results — but Krugman argues that this goes beyond even that.
It’s really hard to imagine any set of criteria whereby this obsession with austerity could be judged a success, unless the objective is to entrench and aggravate suffering, misery and dislocation.