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Draghi Is "Bouncing Economic Rubble With Trillion-Dollar Debt Missiles"
Submitted by Jeffrey Snider via Alhambra Investment Partners,
The Keynesian revival that is currently underway in the backrooms and hallways of assorted world governments is being somewhat replicated in Europe this week. It is all predicated on the position that all previous forms of “stimulus” from the fiscal side were not the right size, composition or color for that matter and thus the lack of recovery can be attributed to the impurity of the Keynesian solutions. That is further augmented in especially the Krugman view of “austerity” which has supposedly undercut all the good deeds done by central banks.
Thursday’s press conference with Mario Draghi announcing the QE program ran dangerously into interfering with that Krugman view, while also keeping within the spirit of the “purity” argument. Toward the end of the question and answer session, the ECB’s chief was asked about hyperinflation, as if this latest balance sheet expansion might nudge Europe closer to Weimar.
The second question, I think the best way to answer to this is, have we seen lots of inflation since QE programmes started? Have we seen that? And now it’s been quite a few years since they started. Our experience since we have these press conferences goes back to a little more than three years. In these three years we’ve lowered interest rates I don’t know how many times, four or five times, six times maybe. And each time someone was saying this is going to be terribly expansionary, there will be inflation. Some people voted against lower interest rates way back at the end of November 2013. We did OMT. We did the LTROs. We did TLTROs. And somehow this runaway inflation hasn’t come yet.
While you might give him credit for his weasel word of “runaway” in the last sentence I quoted, the entire thought is very, very close to an admission not just that “runaway” inflation never came but nothing else did either. Maybe it was a slip, but it’s not like the ECB’s governing council is not aware of the scorecard, especially as Europe has already seen its first negative inflation rate since 2009.
But the setup is the same as the Keynesians are using, taking a page out of the justifications Communists have been disingenuously suggesting since almost 1917.
We have been living in the age of Keynesianism reborn from crisis (which his theory contributed mightily toward), but now we are being told that though it may have been some Keynes it was not enough Keynes. Apparently, like QQE purchases of Japanese government bonds, there is a magic and sadly secret formula which in the exact right formulation delivers enchanted economic properties. For some reason, like every monetary point, central banks and governments keep falling short in their mixtures as the answer to all our problems is always more and more of it.
To hear Draghi answer that question you almost get an audible sense of frustration on his part, maybe even well beyond what he considers to be the idiotic assumption of hyperinflation (as if that would ever happen under his leadership). I think that plus what he actually says reveals exactly this idea, in that the ECB has been “restrained” in its approach up to this point and none of it has done much of anything good (apart from massive stock and bond imbalances, the very pre-requisites for hyperinflation along with a healthy dose of “deflation”). That lack of efficacy is thus due to the “impurity” of the ECB’s practicing monetarism to this point.
The inevitable failure has simply freed the ECB to do what its most ardent debasers have wanted to do all along, which is why Draghi is almost openly contemptible toward his own handywork – to prove he had not failed, but rather that those holding him back were wrong, wrong and wrong. There will be no more impurities in moving forward, and the ECB is confident that this “open-ended” commitment (don’t ask the Fed about that) will go where previous forms did not.
The funny part of this, blinded perhaps by his monetary theology, is that Draghi doesn’t see any increased danger in “runaway” inflation from QE as exactly the same as in all prior monetary outbursts. What will his reaction be when just plain “inflation” does as well? There is indeed a commonality among all these programs, all questions of theoretical purity aside:
If so many Keynesian gods would stop trying to manage and start trying see their own god-like tasking as menacing there would be less depression and such widespread failure. An asset bubble is no more an act of God as an act of perfectly captured humanism branded as “experts” on playing God. These are the same people that thought it not only possible but a duty to “fill in troughs without shaving off peaks” sitting around now trying to develop new theories as to why, suddenly, God shaved off the peaks.
As it is, recriminations have already begun, as the lack of expected enthusiasm for the QE in its present form has led to whispers, rumors and calls for it to be already expanded before its actual launch in March. Someday, maybe, these central banks will find that secret formula that unlocks the commanded utopia from its monetary prison, but I think it more like what led to the end of the first Gulf War, where continued air raids upon Iraqi positions amounted to destroying rubble. As Colin Powell put it, “we were bouncing rubble with billion-dollar missiles.”
That seems to be a fitting, paraphrased description of the European state of monetarism, bouncing economic rubble with trillion-euro debt missiles.
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Once you pull the pin mister grenade is no longer your friend. These people seem to never to of heard of the law of unintended consequenes, even though it constantly bites them on the ass. We had to destroy the village in order to save it.....
They are very resolute. Not stupid. They will keep handing trillions to the rich until the economy improves.
Here’s an interesting cut-n-paste:
Today, the Central Bank of Iran has announced that all international trade transactions will be conducted in the currencies other than the US Dollar - Chinese Yuan (CNY), Russian Ruble (RUB), Turkish Lira (TRY), Euro (EUR), South Korean Won (KRW).
The Deputy Director of the CBI, Golyam Ali Kamyab, also stated that Iran is considering the feasibility of conducting the international trade in other currencies.
Looney
The law of unintended consequences NEVER bites banksters on the ass.
It's the middle class who gets chewed up...
Wtf are these people stupid. Boom. I though Europe could not just print money out of thin air that only the USSA had that rediculous privledge. Who is buying the debt of Europe? I know its not us china russia we are all broke guess that leaves Japan? This should really piss maddof off he is in jail for alot less than these bohemian monsters
ANY central bank can print as much money as it likes and nobody has to "buy" this debt - it's just created out of thin air plus dilutes the buying power of existing savings/deposits. The real problem ( hyperinflation ) arises when the citizens understand that all that newly printed money actually carries no value whatsoever as a backup ( gold in their vaults e.g. ). THEN everyone runs to the bank to get his deposits back and SPEND them asap before they become worthless and THEN hyperinflation sets in. Right now, there is no hyperinflation because all that money is now being used by the central bank to buy junk-assets from unstable TBTF banks and in fact, the only purpose of QE is to save the banks and inflate the stock markets.
The operation was successful, but the patient died.
Whatever it takes
Honestly, I'm sick and tired of any article by industry shills "explaining" why QE will not work. That is obvious. We should be focusing on exposing these guys for what they are - criminals who are stealing from their societies and giving the plunder to their bank masters (themselves). Some articles are beginning to do this. The question should be how much jail time they get, how to end their theft.
Any shill who debates why QE doesn't work at this point is probably someone who plays this corrupt game and benefits from gambling other people's money.
Agreed. But I prefer to call them parasites, because they are sucking the life out of other productive assets only to avoid their own insufficiency, which would otherwise result in bankruptcy.
The bankers of the world truly are living out the definition of parasite.
QE is not for any person on main street or J6P, although sold as such. Rather, it is a policy invoked to avoid bankruptcy of all the insolvent western banks at the taxpayers' expense.
TOTAL PARASITES.
QE is not for any person on main street or J6P, although sold as such.
The problem is that the person on main street who gets their news from the MSM is constantly being told how great things are and how we are in a recovery. The average person still believes this, even though their own personal circumstances are far from being better off.
The tide will turn only when the average guy rejects the lie of the US recovery.
Really? So you mean if you went long as fuck the past 6 years, that didn't help you?
The people that listen only to the MSM are stupid I watch them for laughs and the weather. This game is over . I read Iran is de dollarizing as well what about the 12 billion they got and this whole thing is fucked
society being the host. parasites have one thing in common - big orafices, or cutting adaptation to penatrate. sucking device, knawing too. they suck a host typically of vital fluids. in their natural setting they serve a vital role in the chain.
bankers, i mean parasites, yes sir excellent description. plus 1(all i can give)...
lamprey, mosquito, tick, come to mind.
When you ain't got nothing, you got nothing to lose - in Greek: ???? ??? ????? ?????? ??? ????? ?????? ?? ??????
The bankers know exactly what they are doing. Look at Japan, they are harvesting ALL of the wealth. The JCB owns almost all the government debt, it will own all of the equity market and, undoubtably, own the entire real estate market. This is not by accident, this is intentional.
The Fed and ECB are looking to do the same. When these banks own everything... the owners of the bank own everything. At that point, nations and laws will no longer exist as they have traditionally. All will be rewritten by the masters. All the rest will be slaves.
something significant will happen first...
Stealth Bolshevism
So now what?
Would appear a "sanctions regime" has now sanctioned the US.
I'M SHOCKED!
SHOCKED I TELL YOU!
Officer...
ARREST THOSE CRIMINALS!
Oh, wait. This is was we voted for.
Don't worry! We will abridge your Right to free speech and all will be well!
A glorious recovery awaits!
FREEDOM, DEMOCRACY...
AND STUFF!
The business briefing on the radio just had some ass from CNBC saying that Europe is doing QE because it has worked here and "most economists agree the US economy is now growing at 5%"... I almost drove off the fucking road
I was convinced long ago that all these asshat "economists" have absolutly no clue what they are saying, but love to hear themselves say it!
Legends in their own mind!
UPS and the BDI don't seem to have got "all is great" message.
Not sure how they are going to massage Q4 positive, time to consult the
Magic Circle.
We weep for you Kiev!
Israel....you are our one and only!
Davos? YOU SLY BUGGERS YOU!
FREE TRADE WITH CHINA!
ALL IS WELL!
they aren't lying. in their minds the stock market is the economy.
Come on things are so good I dont know what to do with all the money I am not making. Its party time
Looking forward to seeing Japan blow up first.
a crumble for now. slow drain out of vital liquidity. see above parasite comments...
You go, Mario! Push that string!
They are playing "I wonder what happens if I push this button" with the world economy, and not to mention our frigging lifes. May they all ESAD.
If all those trillions were going separate me and my massive wealth from the masses and their middle class wealth, I'd be on TV saying that the Keynsian stimulus was not large enough too. Property owners love to see their homes and stocks go up in value and become more unfordable to those that do not have significant masses. It is a wealth multiplier- if you had a lot of wealth, you suddenly have a lot more. If you had zero wealth, you the wealthy just kicked sand in your face. You've been grubered again.