The Streetwise Professor asserts that German plans for fiscal discipline in the eurozone via financial sanctions can’t work. He’s totally right if they’re implemented via fines: if some entity goes broke, trying to get them to pay fines on top of their existing debt mountain obviously won’t work. But in a group you can allocate blame positively: reward the good guys. For instance, when distributing the proceed of say eurobonds, you simply overweight the good members. So, for instance, you flood Estonia with money to compensate for the Greek economy going down. As long as they manage to spend it, zone balance can be maintained, rewarding good past behaviour in the process. It’s operationally practical because it doesn’t involve taking something by force from someone who doesn’t have it, but redistributing something you do have.
It would be even easier in a MMT framework: if the Eurozone governments had most of their spending supplied by an ECB-set zonewide printed allocation, sized based on the inflation target each period; a fiscal authority could then adjust the weighting of how much of the allocation goes where based on merit.