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Pieter, yes, they are creating more money. The core problem are the banks. So, Germany is trying to save its banks by giving money to Greece.

Either way, I think that if the state helps because the banks are in trouble, then the banks should be taken over by the state. It makes no sense to have taxpayers pay in order to make whole the shareholders, bondholders and managers of banks that have made the wrong bets.

Of all, I don´t see any reason the managers should keep whatever remuneration they received in the past. It is in nobody´s interest to keep the same people in charge.

If the state takes over the banks, it receives assets in exchange for the money it has created. Once the emergency is past, the banks can be put on the market again and money recovered.

Printing money out of thin air leads to a devalued currency, higher taxes and interest rates, as you said. This then has a detrimental effect on the rest of the economy, even those sectors which would otherwise be healthy. So, taking over the banks would seem to me to be the way to go. But it was not done here in Europe, nor in the US.