Forget the € and demand management!

The title of this post is a bit exaggerated, yet it helps stressing the gist of the point I want to make: policy makers, market participants and ordinary citizens should start devoting less attention to the € and to demand management and should concentrate, instead, on supply issues.

Let me expand a little this basic idea.

Who said what on the euro?

The euro and Nobel prizes

The contemporaneous award of the Economics Nobel prize to Eugen Fama and Robert Shiller, who have reached quite opposite conclusions on the ability of financial market to always generate prices consistent with economic fundamentals, has, in some quarters, raised doubts about the wisdom of those who decide the Nobel prizes. These doubts are at least late and probably wrong.

Don´t supply more when there is no demand!

Over the last few weeks the words uttered by the ECB President, first in front of the European Parliament and then in the latest press conference,  according to which the ECB is: "ready to use all available instruments, including a LTRO (longer-term refinancing operation), to ensure that developments in short-term money market rates are in line with our medium-term assessment of price stability." have attracted a lot of market attention.