The great thing about this current man-made economic crisis – other than the brilliant cover it has provided for government to launch the biggest financial power-grab the free world has ever seen – is that its bright red flashing light has distracted attention from just how structurally unsound the entirely synthetic euro is proving to be.

Spain’s economy, for example, is asphyxiating: unemployment is running at 14%. Its deficit is 7% – incidentally, that’s over twice that allowed by the Maastricht Convergence Criteria. It also has a current account deficit nearing 9% of GDP (whilst Germany has a current account surplus of 7%).

The next great sub-prime lending disaster is hiding within the Western European loans to Eastern Europe of around $1.5tn. Austria, Belgium, Sweden (and Switzerland) have a loan exposure of between 25% to 60% of their GDP. Italy has a debt to GDP ratio of over 100% (but that’s just to itself).

As of February 2009, the lowest eurozone annual inflation rate was Ireland and Portugal at 0.1%; the highest were Finland 2.4% and Malta 3.5%. In the same month, manufacturing output was declining at record levels, hitting Germany and France particularly badly.

So, it is about the best the eurozone can do at the moment not to fall apart – and the pressure hasn’t even started yet.

According to the European Central Bank, the M3 money supply across the eurozone is growing at 6.5% annually. ECB interest rates are currently at 1.25%

Against any logic (other than straightforward duplicity), the Keynesians have somehow convinced the world that the big fear for the global economy is deflation. Milton Friedman said that inflation was always and everywhere a monetary phenomenon. Inflation is properly understood as an expansion of the money supply (and credit).

In summary, manufacturing output is falling. Certain member states are encumbered by massive debt.  Both considerations will push the ECB to consider lower interest rates. But the money supply is already expanding at a rate far greater than has been reflected by price rises.