Fiscal Integration is a State of Mind…

Does the EU need to change their Treaties to achieve fiscal integration and control? Judging by the reports from the recent Summit much debate surrounded the legality and sovereignty issues. This is a sideshow. The EU does not need a slew of referenda and laws to reign in spending … all it needs is for member states to, well, stop spending…

Keynes is to blame for all this … simply put, Keynesian demand management policies justify budget deficits to ‘stimulate’ the economy. The problem is that these policies don’t work … if they did, the Greek economy would be booming. Governments need to recognise that a deficit does not equal stimulus. Once the EU accepts this fact the problem is solved. Its all a state of mind.