ECB Joins the Phony Money Party to the Tune of €1.1 Trillion
The European Central Bank (ECB) will begin a new quantitative easing (QE) program in March. The central bank announced this morning that it would buy at least 1.1 trillion euros worth of euro-denominated bonds from governments and private institutions across Europe. It will begin its monetary manipulation at the rate of €60 billion a month, which will last into the fall of 2016. If you’ve got a few minutes to waste, you can watch ECB President Mario Draghi deliver the news himself:
Like Janet Yellen, Draghi uses the bogus excuse of low inflation as one of the primary justifications for the program. This renewed commitment to creating European inflation boosted to gold, pushing it over $1,300. It has been hovering above and below that key level all morning. European stocks rallied, which is precisely the sort of artificial asset inflation that central planners tout as a positive effect of QE. Don’t miss Marc Faber’s scornful remarks on this phenomenon.
Ostensibly, European QE is meant to stimulate a struggling European economy. However, more and more analysts are waking up to the fact that QE is a dangerously destructive tool. The truth is that monetary stimulus like this simply destroys the purchasing power of a currency, which means Europeans can look forward to a higher cost of living in the years to come.
Even former central bankers are making public their doubts about QE programs. Earlier this week, former Bank of England governor Mervyn King said that monetary stimulus doesn’t appear to really help an economy:
We have had the biggest monetary stimulus that the world must have ever seen, and we still have not solved the problem of weak demand. The idea that monetary stimulus after six years … is the answer doesn’t seem (right) to me.”
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I can easily imagine a situation in the relatively near future when Germany decides that the stimulus is very much against their interests, and acts accordingly !!!
Listen, 6 years of QE to the tune of $4.4 Trillion dollars has not helped the United States and, as Peter always points out, has made the economy much worse. QE did not work for the U.S. and it will NOT work for Europe either. A round of applause for the Swiss…they finally got it right. It took real balls !