NEW YORK ( TheStreet) -- When the "green shoots" of recovery appeared in Europe earlier this year, with growth of 0.3% for the second quarter, fans of austerity breathed a sigh of relief.After five years of tightening belts, it seemed that growth was finally on the way. Maybe not. Once again European growth is slowing. The size of the eurozone economy is 0.4% lower than it was in the third quarter of last year. France and Italy both contracted during the last quarter, while growth in Germany slowed. Total growth for the third quarter came in at 0.1%. While the U.S. has pursued a fiscal stimulus and then a monetary one, and has gotten out of gear on an ocean of fracked oil, Europeans have been reluctant to either spend or create new money, fearing inflation. The results seem clear. Germany is getting the same economic boost from renewable energy that the U.S. has gotten from fracking. The U.S. has cut its record deficits in half, while Germany is running a budget surplus and is able to export profitably. Yet in response to its successful investments Germany has been demanding that other countries in the eurozone cut spending to reduce deficits, and so those economies continue to shrink, reducing demand for the very exports on which Germany's future growth depends. That is what is tearing Europe apart. Germany's successful energy program and fiscal discipline are holding down aggregate demand elsewhere and building resentment across the continent. Because there is less money to buy goods, the price of goods is falling. Spain, Cyprus, Ireland and Greece are all now suffering from deflation. As the U.S. found during the Great Depression 80 years ago, deflation is worse than inflation because demand falls faster than supply. The European Central Bank recently cut refinancing rates to 0.25%. There's not much further down it can go. But don't expect anything like the Federal Reserve's quantitative-easing program. The bankers in Europe are opposed to it on a philosophical level. As Japan has shown, a deflationary spiral can be much more difficult to break out of than an inflationary one. Only recently, with what is called "Abenomics," is the country starting to pull out of the slide. But it's a long slog back, and Covestor.com has warned here that, once again, "debt debt debt" could hold Japan back. The longer deflation is allowed to persist, the harder it is to jolt an economy awake. Japan has shown that deflation doesn't solve government's debt problems, it exacerbates them. Loans are made just to keep going and can eventually crowd out loans made to spur growth. The solution seems obvious, but it's difficult on a philosophical level. Europe needs to create more money and spend that money on projects that can pay for themselves. That needs to happen across the continent, not just in Germany. The European equivalent of Hoover has been tried. Time for a little Roosevelt. Follow @DanaBlankenhorn This article was written by an independent contributor, separate from TheStreet's regular news coverage.