According to Christine Lagarde, Managing Director of the International Monetary Fund, 500 billion more euros in rescue funds are needed in order to avoid a “1930s moment” characterized by high inflation and unemployment. The comments come soon after talks between Greece and its creditors were adjourned on Friday. Considering last week’s downgrade of the Eurozone’s own bailout fund, it is remarkable that this sort of rhetoric is still being voiced by those who have a significant amount of power and influence.

The problem with suggestions such as those made by Ms. Lagarde is that they are politically useful and influential. If you are in charge of an organization such as the IMF, it is impossible to advocate a market-oriented solution to the current crisis that allows for the default of certain countries and a radically different monetary policy. The problem with the proposed resolutions to the eurozone crisis is that those in authority approach the issue with too much political baggage. If the euro had not been a political endeavor it would be a lot clearer what steps need to be taken, particularly in regards to the PIGS nations (Portugal, Ireland, Greece, Spain). Unfortunately, too many politicians in Europe are unwilling to admit their mistake, and millions of Europeans will suffer more than necessary because of their stubbornness.

Economic stimuli can sometimes provide temporary economic stability. However, long-term economic stability and growth cannot be achieved through the sort of measures being advocated by the IMF and governments across Europe. Indeed such measures can be harmful in the long term. Economists such as Robert Barro have been arguing this point for some time.

Ms. Lagarde has not explicitly said where the new 500 billion euros she wants will come from. Whatever its source, be it increased taxation, contributions from a more fiscally responsible country, another round of quantitative easing, or a combination of these, the outlook for the long term looks bleak. It is a shame that we are in this incredibly volatile situation, but we have the politicians of Europe to thank for making the situation worse than it could have been.