The current economic crisis has been assumed to reflect a cyclical problem, and some

economists have asked that it be dealt with 'fiscal stimulus packages', especially

packages associated with public spending. This action is similar to that of giving

steroids to a patient who suffers from a serious illness. It might make him or her feel

temporarily better, but it actually aggravates the illness.

Dollars, Euro's, and Debt suggests that an increase in public spending is the wrong

medicine, because it was precisely the increase in public spending that created some

of the structural problems that are now confused with, or have led to, the cyclical

slowdowns. The book argues that, over the years, and in a growing number of

countries, the high and increasing levels of public spending were, first and progressively,

being financed by higher tax levels and, subsequently, by increasing borrowing.

In the early years of the twenty-first century governments started facing strong

taxpayers' resistance to tax increases. Thus, they relied more and more on public

borrowing, pushing the public debts to high levels. More recently they started facing

stronger resistance by private lenders, that led to the progressive easing of monetary

conditions by central banks. The central banks' actions have made it difficult to

separate fiscal from monetary actions and have hidden some of the true deterioration

in the fiscal accounts. They have also increased future uncertainty and potential 'time

consistency' problems. The book evaluates the effects of 'fiscal stimulus packages',

especially when they start from precarious fiscal conditions, and presents a novel

'law of public expenditure growth', and suggests how that law may help in the design

of 'exit strategies' from the current crisis. It also discusses similarities and differences

between the monetary union that the euro and the monetary union that is the dollar.