An expansionary monetary policy stance is entirely appropriate for the euro area right now, even though people will naturally have different views about individual measures. As many of you are no doubt aware, the Bundesbank has repeatedly stated that purchases of euro-area government bonds are not “just another” monetary policy instrument.
Spain no longer has a peseta to devalue; Germany no longer has a deutsche mark to revalue. Other things must therefore give instead: prices, wages, employment and output. Which brings me back to my original question: which countries have to adjust? The typical German position could be described as follows: the deficit countries must adjust. They must address their structural problems.