As I said earlier, the answer to this question spans the entire spectrum. 45. That monetary policy should respond if there is inflation, meaning there is sustained increase in the general price level, is beyond question. But high food prices often result from adverse supply shocks or large increases in input costs.
As money flows out of stressed countries and into safe-haven countries like Germany, it pushes up interest rates in the stressed countries, and pushes down interest rates here. These flows cause Target-2 imbalances to increase. What has not been sufficiently acknowledged, however, is that these imbalances would only affect German taxpayers in the event of a break-up of the euro area.