Another Draghi press conference*, another iteration of Mellonist Thought. Draghi’s basic position, which has been iterated and reiterated for four years, is that Southern Europe must continue to go through purgatory in order to atone for its original sins of greed and indolence:
A bit of psycho-biography: Draghi has spent his entire professional life apologizing for Italy. Imagine his life, traveling around the world in order to explain and excuse his country’s medieval politics and ungovernability. Try to imagine for a moment the depths of Draghi’s contempt for Italian politicians (and voters), with their Byzantine disinterest in anything but power, family and money.
Could Draghi be unconsciously (or even consciously) seeking revenge on his country’s unmodern and undisciplined political culture, the succession of Andreottis, Fanfanis and Berlusconis and all of their satraps and corrupt henchmen? Does he perhaps think, like Lincoln, that only by going through a cauldron of fire can his country atone for its sins and enter the modern era? Does he, in other words, think that his utopian ends justify his brutal means? Certainly the tone of his monthly Q&A would suggest impatience if not contempt for the complaints of those who would question his disastrous policies.
He explains to the doubting that near-zero inflation is a good thing:
Please don’t hold the central bank responsible for negative credit growth.
After four years of zero nominal growth and with over 12% unemployment, might it not be opportune to change from a zero-growth policy to a policy of robust nominal growth? No, it wouldn’t make any difference. The problems are cyclical and structural, and the solutions rest within the countries themselves:
“Ask yourself what should these countries change to become more competitive? And what adjustments are needed in order to achieve this objective?”
Have the ECB’s deflationary policies been effective? Is rising unemployment a signal of policy failure? Not at all, in fact our policies have been very successful:
So there you have the evidence. Draghi is not unfamiliar with the relevant literature. He studied at MIT under Modigliani and Solow. He knows all about Fisher, Keynes, Friedman, Eichengreen and Krugman. I’m sure he even knows about Market Monetarism (perhaps Mark Carney has mentioned it to him). He understands how the modern semi-capitalist economy functions. What he is doing is conscious, deliberate, sincere and not an act of misfeasance. It is true that he is bound by his single mandate and by the politics of his Governing Council. But that does not explain the evident sincerity of his monthly testimony. He is a true Mellonist, as Krugman would say. He wants to purge the rottenness out of the system. He wants people to work harder and live a more moral life.