Gentlemen: Start your presses?

There is much talk about the latest solution to Europe’s debt crisis being to let the ECB turn its printing presses to full throttle, and start printing out an extra couple of trillion euro (trillion. Yes, we’re now talking about trillions!) to cover Italian debts and also to act as a form of quantitative easing to reflate the economy. Not surprisingly, the Germans have a big problem with this, primarily because of a strong German folk memory of the Weimar years of the 1920s and galloping hyper inflation.

Would it work, if the Germans agreed? I don’t know, I’m not an economist, but I do have an idea about how to reassure the Germans. If we were, for argument’s sake, to print out a trillion extra euro, how about we also agree to levy a EuroTax on, say, petrol in the eurozone, with the idea being that the tax would be structured to suck, say, 10% of the trillion euro out of the economy and back to the ECB every year for ten years. It would give us the benefit of having the money entering the economy and creating economic activity, but by having a mechanism and date by which the “artificial” money will physically be removed from the eurozone economy, it could act as a long term counter inflation agent, and more importantly, as a reassurance to the Germans that this is a temporary measure.