Today on the Eurozone Crisis
By Arnold Kling
the central bank transmission mechanism has been compromised because expansion or contraction of high-powered money makes no difference to the overall amount of money which is multiplied into the system.
Pointer from Tyler Cowen.
One way to look at the U.S. case is that the Fed bailed out the banks but carried out a contractionary monetary policy. The result was a steep recession. Is Europe going down that path?