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News Link • Economy - International

European Central Bank Also Plots the End of the EU


Mario Draghi

ECB President Mario Draghi cuts the euro's last lifeline ... Anyone thinking that the arrival of Mario Draghi as president of the European Central Bank might herald a change in approach to the eurozone debt crisis would have been sadly disappointed by his first public appearance in the new role on Thursday. True enough, he did cut interest rates, but this was already part of a pre-written script and can be easily justified by what Mr Draghi referred to as "slow growth, heading towards mild recession". No, and a thousand times no, he said to those calling on the ECB to stem the crisis with massive purchases of periphery-nation debt. The ECB's function, he reiterated, was to focus exclusively on price stability, not to act as lender of last resort to governments. Already, he seems like a clone of his predecessor, Jean-Claude Trichet, who famously had only "one needle in his compass" – inflation. Regrettably, it was this very same anti-inflationary zeal that is likely to have sealed the eurozone's fate in slipping into "mild recession." ... The idea of a "mild recession" is also a contradiction in terms; recessions are never mild. – UK Telegraph

Dominant Social Theme: The European Central Bank will do what it needs to do. It is an inflation fighter.

Free-Market Analysis: This is a big dominant social theme of the power elite – that central banks fight inflation. Central banks CREATE inflation by printing money from nothing. But the elite promotion is orchestrated to avoid that reality.

Over and over, you'll see good, gray central bankers dressed in expensive suits stepping up to a bank of microphones to enunciate their concern over "inflation." They don't mean inflation, of course, which is monetary. They mean PRICE inflation. Meanwhile the printing presses churn behind them.

Inflation is monetary. The more currency you print, the more inflation you are creating – and sooner or later it translates into PRICE inflation. As the volume of money grows, the value of currency lessens. It's an ineluctable fact. Here's some more from the article:

The ECB's position is a mass of contradictions. The ECB has already intervened quite heavily in sovereign bond markets, to the disgust of German council members, two of whom have resigned over the issue. But on this too Mr Draghi is sticking to the sophistry of his predecessor's justification. The purchases are temporary, limited and justified by monetary policy considerations, he insisted ...

Insurrection against the penalties of the single currency is by no means confined to Greece. Berlusconi appears as much dead in the water as Papandreou. Greece doesn't matter; the eurozone economy could cope with a hard Greek default ... But Italy, the eurozone's third largest economy as well as the world's third largest sovereign bond market, is a different matter.


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