Can it be inflated away?
Unicredit thinks it is highly unlikely that real interest rates can be negative enough, for long enough, to solve the problem
By Buttonwood
REGULAR readers will know the mantra "inflate, stagnate, default" that this writer has perceived to be the three likely outcomes of the debt crisis. Now Marco Valli, the euro zone economist of Unicredit, the Italian bank, has produced a very interesting 27-page note on the issue. To give the game away, the title is "Inflating away the debt overhang? Not an option". Mr Valli argues that a central bank trying to achieve this aim would face three challenges
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