As it stands, the ECB has no instruments available to give money to people for free (helicopter money). It is a political problem to have a central bank engage in fiscal policy. This is traditionally reserved for government, and it is called “tax cuts”. From a democratic point of view it is doubtful that fiscal operations by an institution without a mandate are helpful. It is government that drafts a budget and then goes through with it so that when people do not like the results they can vote for other parties to get rid of this budget.
It seems that Europeans have forgotten a lot of fundamental lessons when it comes to democracy. By accident, it almost seems, member states have given up their sovereignty. Greece is ruled by the Troika, the euro zone the informal Euro Group. None of the reactions and reforms to and in the crisis strengthened democracy. We are on a slippery slope, but not the way that Hayek imagined. Markets seem to take precedence over democracy. A central bank that engages in fiscal operations would be yet another step in the wrong direction.
We need fiscal spending in the euro zone to increase, but the people should get this done by voting for politicians that create some reforms that will help the economy. If that does not seem likely to happen, then actors should start preparing the field right now. What are the real causes behind this crisis? How does credit work? Who created money and why is it accepted? What causes inflation? What about demand weakness?
The Europeans still haven’t entered into this debate, which is a colossal intellectual failure.