Ashoka Mody, Columnist

Clueless in Europe

Don't let a bunch of scolds dictate monetary policy.

October 19, 2015 at 6:00 AM UTC

Ashoka Mody is a visiting professor in international economic policy at Princeton University. Previously, he was a deputy director at the International Monetary Fund's research and European departments. He is the author of "EuroTragedy: A Drama in Nine Acts."

Wolfgang Schaeuble, Fed critic.
Photographer: Jasper Juinen/Bloomberg

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Despite a slowing Chinese economy, decelerating inflation and a stronger euro, European Central Bank President Mario Draghi has said he will do more to support euro-area growth only "if necessary." He should stop listening to Europe's scolds and do the right thing.

Ben Bernanke, the former chairman of the U.S. Federal Reserve, has reminded us that in November 2010, German Finance Minister Wolfgang Schaeuble described U.S. monetary policy as "clueless." The Fed had decided to step up purchases of Treasury securities to help lower long-term interest rates, in an effort to ward off a small risk of debilitating deflation. Schaeuble described the move as a "sly" effort to weaken the dollar, apparently forgetting how an undervalued euro was boosting Germany's trade surplus and weakening global growth.