Not correct, this is helping the debtors (like our government) while extremely hurting the savers, people on fixed income, people with a pension and low income. As most western-european countries import more than they export (especially energy and food, when their currency goes down, what they can afford to import goes down as well.
What we're seeing and why the $ and € don't fluctuate much (even though Europe is in such a mess) is both Europe and the US (and all the others) are devaluing their currency one after another.
It's called Currency Wars: "Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008. http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/...
Don't forget the debtors that aren't the government, the vast majority of the population.
The dollar has been absurdly overvalued for a long time, destroying our exports and causing us to import excessively, leading to trade deficits and more debt.
Not that savers won't be hurt unfairly, but they will be hurt even more by the accumulation of capacity loss caused by the lost potential output of austerity philosophies. Unless they are retired, and don't plan to participate anymore - then they're just screwed. Unless we decide not to eviscerate Social Security and Medicare, that is.
The most important thing is not to have people who want to work sitting idly, especially people who are newly entering the workforce. This destroys the future more than debt ever could. We either need to lower nominal wages or devalue the currency to the same effect - or let massive unemployment become the new normal. Good luck lowering nominal wages: It's really a choice between the last two options.
I'm not sure what the conservative saver horde expects will happen to its savings over the long term if interest rates stay at 0% or negative indefinitely. Maybe pour all of their money into something else dumb like dotcoms or real estate and become the whiners of tomorrow?
Would savers be better off if the banks they invested their money in collapsed, or if pensioners saw the government cut their pensions because it could no longer pay them? When a small country sees a big sector in their economy collapse like Iceland and their banking sector, there's going to be pain no matter which way you slice it. What the route Iceland has chosen does is spread the pain evenly between retirees who see their savings lose value and workers who see their paychecks love value. And you avoid the mass unemployment you tend to get through other methods, which further decreases the size of the real economy in a sub-critical positive feedback loop.
I could be wrong but aren't most pensions linked to inflation? I guess they could lag a bit, though. I'm also not sure there are that many people, in the US at least, on an actual fixed income. As for people with low income, if unemployment is high, then there's a decent chance they're out of the job without devaluation (according to this point of view) so overall there may be more economic hardship without the devaluation.
that may or may not be a problem (a kind of moral hazard) depending on your perspective but it's not an argument about devaluation vs piecemeal austerity, it's a separate issue. maybe that video explains it but i didn't have patience for more than a couple minutes of it. do you have a written argument?
What we're seeing and why the $ and € don't fluctuate much (even though Europe is in such a mess) is both Europe and the US (and all the others) are devaluing their currency one after another. It's called Currency Wars: "Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008. http://www.amazon.com/Currency-Wars-Making-Global-Portfolio/...
Here's a nice video explaining it using a comic from the '50's! http://www.youtube.com/watch?v=bFxvy9XyUtg