First to zero and then deflation? Maybe not but the situation is dire. In the region as a whole inflation is just 1.1%, just over half the “target”. In other countries, such as Spain, it is rapidly converging on zero! But no matter, it is only slightly below target in Germany.
And this is what the one size fits all monetary policy has achieved. Overall, nominal spending is way below any reasonable ‘desired level’. Again, Germany is the exception, while Spain is ‘deeply buried’.
Real growth is nowhere to be seen. Even mighty Germany is barely keeping her nose above water. Meanwhile the “south”, with Spain as ‘representative agent’, has been in recession continuously for the past five years.
And nothing will change Germany´s mantra that “austerity is the only cure”! With inflation disappearing and real growth significantly negative, no more “austerity” will be possible.