The end of austerity and the Euro

There has been a sea change in the behavior of the euro with the EU elections earlier in the month. Forget about the politics and focus on what happens when there is an end of austerity in the EU. The Euro actions seems justified. First, governments cannot provide a solution to austerity unless there is strong support from the monetary authority. Second, to solve the debt problem that will come with less austerity the central bank will be required to generate more inflation. The result will be more money in the system without a structural change in government behavior. The impact on the currency will be clear, a decline from the higher expected inflation. The Euro will only strengthen if there is a movement back to austerity.