Ben Bernanke has vowed to fight deflation with every tool available to him in his role as Chairman of the Federal Reserve Board of the United States. As he put it last August,”If the economy does truly get worse and deflation threatens, there are steps the Fed could take that would increase the money supply, stimulate lending, and boost demand.” Note that he doesn’t talk about banks suffering credit losses and needing additional capital, nor does he even consider the role of the Fed as lender of last resort – he focuses first and foremost on deflation.

The Euro was a spectacular effort to create an international de jure fiat currency, and it has failed miserably. The Euro is used as the currency of such wildly divergent states as Germany and France on one hand; and Greece, Slovakia, Slovenia, Malta, Montenegro, Cyprus, Estonia, San Marino and that hot bed of smuggling, Andorra, on the other. It was officially created on December 16, 1995, became an accounting currency on January 1, 1999, and sprung to life with coins and bills on January 1, 2002.