As shown below, the credit channel of monetary policy transmission is as clogged and impeded in Europe as it is in the US. During the first seven years of the “euro” boom, private debt footings in Europe soared at a 12% compound annual rate. In short order, the available balance sheet headroom on European household and business balance sheets was used up. The single currency miracle was then over because it was rooted in an artificial and unsustainable credit boom, not organic improvements in capitalist productivity and efficiency across the continent.
Since the financial crisis, however, private sector loans in the euro area have plateaued, and for an obvious reason that only Keynesian economists and central bank money printers cannot comprehend. Namely, that private incomes are stagnant and leverage ratios are at their maximums.