A Discussion and a Proposal on How to Revive Europe… without Waiting for Godot the Prince

A theoretical error and an empirical misconception have in large part stalled European economic policy since the birth of Monetary Union. The theoretical error lies in defining the re-establishment of financial equilibrium in the budget solely as the reduction and eventual elimination of national deficits. The imposed limits on budget deficits and national debt, as well as the transfer of monetary sovereignty to the European Central Bank and the European system of central banks, have led some to talk of the “death” of national economic policy. Indeed, monetary policy decisions are made in Frankfurt, and budget policy is blocked by the zero deficit rule.