It is true that in the last 10 years global central banks were the only game in town. It is also fair to say that the ECB is severely constrained in its ability to do more /Isabelle Mateos y Lago, FT, 5 September 2019/. Indeed, the Eurozone needs a looser fiscal stance.
Nevertheless, additional capital spending will not work, due to the “two-in-one” structure of the Eurozone. Stronger consumer spending is the only game in town. All members need a complete overhaul of taxation by lowering all income taxes that will –temporarily- result in larger deficits.
Governor Matolcsy, MNB, the central bank of Hungary
Re “Tinkering with European fiscal rules will not be enough”
