Yes, The ECB Chief Economist Really Said It: "If You Print Enough Money, You Always Get Inflation. Always."
Once upon a time there was a cute, if amusing and terribly disingenuous debate among those who have never actually traded but pretend to know finance, about what QE and "unconventional policy" actually was. "It's an asset swap" they said, "it's not printing money" they said.
We are happy to close the chapter on all those sophist hacks once and for all, with a painfully obvious, if stunning in its honesty, declaration by none other than ECB Executive Board Member Peter Preat, who earlier today said the following: "If you print enough money, you always get inflation. Always."
The full context from Reuters, which reports that "money-printing plan has so far failed to drive up inflation" and touches on Europe's odd fascination with never having a backup plan: "the bank does not have an alternative "plan B", ECB Executive Board member Peter Praet said in a magazine interview published on Wednesday.
More details:
"I accept that our policy has not yet been successful: inflation in Europe has for a long time been at a very low level of almost zero," Praet, the ECB's chief economist, told Belgian weekly magazine Knack.
Praet said various factors, notably low oil prices and less buoyant emerging economies, meant it was taking longer to reach the goal of inflation of close to but below 2 percent.
"We need to be attentive that this shifting horizon does not damage the credibility of the ECB," he added.
Too late, friend.
Inflation has missed the ECB's target of close to but below 2 percent for almost 3 years and it will still take years at best to drive up price growth towards the target, the bank forecast earlier.
Praet said that, despite this shifting horizon, the ECB did not have an alternative to its policy of low interest rates and 1.5 trillion euro asset buying scheme.
"There is no plan B, there is just one plan. The ECB is ready to take all measures necessary to bring inflation up to 2 percent. If you print enough money, you get inflation. Always. If, as is happening now, the prices of oil and commodities are tumbling, then it's more difficult to drive up inflation," he said.
"If a whole series of such things happens, then you can only shift the date by which you will achieve higher inflation."
Ah yes, when reality "happens", and screws up the excel spreadsheet which central planners had in mind for the next 5 year plane, one can only extend and pretend, hoping that eventually one will be right.
And, finally, the punchline:
Praet said he remained confident that the stimulus would drive up inflation however, adding: "If you print enough money, you always get inflation. Always."
And with that we can finally close the book on slippery central bank semantics on what precisely it is that they do, and what it is they plan to achieve.
Finally, here is the post-script to Mr. Praet which we have been repeating since day one: "If you print enough money, you always get hyperinflation. Always."
- Login or register to post comments
- Printer-friendly version
- Send to friend
- advertisements -



Those in charge of our central banks are lying to us and/or have no clue.
[No inflation in Europe? What about house prices?]
The crazy thing is that unlike the tech crash or the housing crash, where do you check for the "canary in the coal mine", when your talking about a bubble of government debt?
Start by looking at the people reasponsible for pushing all that paper around AND collecting "fees" and "bonuses" for doing so.
Look at what they spend money on...
But don't worry, such "let the majority eat cake" monetary experiments have been tried before. This time it is simply on a global scale, so the the timeline for the eventual outcome is pushed out a bit more.
Let them eat cake. A smaller one, at the same price.
The problem with QE is that they lent the money to the government who used it to purchase impaired financial assets from bankrupt banks which did nothing to increase aggregate demand in the economy.
QE should have been given to private citizens who would have partied like its 1999 and lifted demand to new heights.
The balance sheet recession was repaired within 18 months, but with no new demand in the economy the balance sheet recession became the capex recession and corporations pursued buybacks rather than reinvestment.
Now the economy is stuck on a glide path with all the capital locked up in low yield debt the velocity of money has converged on the velocity of bond redemptions. i.e. very slow.
It doesn’t matter how hard you pump if you plumbed it up wrong.
Fuck yeah! Goose Nominal GDP by running up the inflation component. Imagine a world of 0% real growth and 7% inflation.
Nominal GDP, 7%
Make the plebes feel good
Assholes These fucks don't understand that real growth is being held back by non-monetary factors
Double Assholes
"Too late, friend"
No, try this: "Too late, ASSHOLE."
There, fixed it for ya'.
"Peter Praet kills self after confessing that the ECB's policies will destroy the EU and millions of people's lives."
I think what Peter meant to say was "When governments print they always run out of other peoples money. Always."
Marie said "let them eat cake."
Moron say "Let them print money."
Same outcome.
Long death.
"let them print cake" - Victoria Nudelman
Like aging populations in just about all of the developed world? Demographics that they ignore, why who knows.
You do realize recessons historically only last 18 months. Well, at least they only last that long when there is no intervention and they are allowed to fix themselves.
Milton Friedman said this earlier, just the other way around...
"Inflation is always and everywhere a monetary phenomenon."
Neo-Keynesians tend to disagree, but then again we disagree with the Keynesians.
Let me summarize that best I know how: Fuck Paul Krugman and the school of Political Economy he rode in on.
I'll fix the ECB Cheif Economist's comment: "if you wait long enough you always get inflation. Always."
inflation = devaluation cause, printing
It's not that simple/direct...
If they print and the money never goes 'into circulation', then the inflation/devaluation effect is not really triggered... like the tree that falls in the forest but no one is there to hear it...
All of the 'new' money being printed is going directly into the reserve holdings of cartel banks... like ballast, it just sits there. And thus the continued deflation (due to economic contraction) we are experiencing in the US (and europe).
Only when the banks 'go bust' or otherwise release/loan their massive reserves will we see inflation. Until then we will see more of the same... deflation in real asset price levels, and some peripheral/artificial inflation in certain other goods/services (caused by regulation/gauging)...
Due to the nature of our FRB system, the newly printed money must become 'credit' before the inflation effect can be realized... and this happens via bank loans or debt default, but neither are happening right now.
Cash is King, but Credit is God.
h/t J. @ ChartWord
The banks are releasing their massive reserves.... it went into stawks, either directly, or like the other poster said by sacrificing capex for stawk buybacks. All this is why the "market" has more then tripled from the lows. Just another asset bubble.... Cash for Clunkers Federal Reserve Style.
What you've stated is true, but only a tiny/miniscule fraction of cartel bank reserves has been necessary to float this market bubble & fund buybacks.
When the remaining 99.9% of those reserves are unleashed, this rigged bull market will seem like a distant memory.
The bubble bursts when people realize they're really hungry and there's no food to be found. Bunch of other bad things happen at this point as well.
This is like being surprised a fish prefers water...
I don't know about that. Didn't hear the sahimi I had last night complain
Your grocery bill.
or equities, or healthcare, or security, or education...
people do eventually figure out that isn't rain running down their backs...
LOL!!!!
Well, only if that paper/digit is accepted by producers of real shit, yes.
Remind me "chief economist", what is the velocity of a dead currency again?
If you strip out everything from the CPI, it's hard to get inflation.
Mr. Praet needs to go back to school and get a refresher course on the difference between money and currency.
+1,0000,000! You would think of a member of the ECB would know the difference between paper scrip and a debt-based currency.
They do, "They" just don't want us to.
If you print ANY money more than the increase in productive capacity, you get INFLATION. DEFLATION is the NATURAL order of things when you have real money. Sincew prices move before wages it actually benefits us lowly wage earners and evens the playing field with those who have expropriated the assets over time.
If the human poplation is growing (and it still is) then deflation is a myth with respect to anything that is required to maintain a high standard of living as this requires real resources. Resources that cannot be simply created out of thin air like the "fiat du jour".
Real growth will follow a real war, after the deflation of the population. It always does.
Or a plague.
Not true. Its not a closed system, currencies are traded on the markets against other currencies, held in multinational banks, used by 3rd and 4th parties, etc. If it were that simple, then governments could easily control their currency value. They can't unfortunately. Just as the ECB just admitted.
Dont know if it was Dave Kranzler who said it, but the elites consider it impolite to flush the toilet while you are in the shower without at least warning you first.
This is the banker classes sick way of washing their hands of the consequences of their actions. Now that they have warned us what happens to us next is our fault and not theirs. At least in their minds
Yes. We will be just as polite and let the executioner whispher in the ear, "I am taking your head now", just before the guillotine falls.
It's the least we can do.
"In a fiat or paper currency regime, you can always generate positive levels of inflation" - The Bernank
yes, then promptly IGNORE them...
execute these fuckers already.
All these worms coming out of the works make you think; like right around 2007-8 this same shit happened and 1999.
Whenever I see a story about printing money not leading to inflation, it always reminds me of that scene in Ocean's Eleven where the casino manager is talking to Terry Benedict after the van explodes with hooker flyers and says, "I don't understand. What happened to all that money?"
How on earth do these numpties get a job in the first place?
When the newly printed money goes to keep the banks solvent Joe Public never gets the chance to bid up the prices of the everyday things that are needed.
You can print all the money you want, but if banks aren't lending to anyone but the .001% you get nothing and like it.
When you print money you get devaluation, overcapacity from misallocation, and deflation from lack of demand do to the loss of purchasing power, and overcapacity.
Yep. No worries though Yen, I know you understand how to profit from such fiat games.
Such "let the majority eat cake" monetary experiments always end the same way.
What will governments do when interest rates rise though? DILEMMA DILEMMA's
They will have to print even more fiat. It's not on the horizon because the West has decimated their economies with political policy. But when it comes (inflation and higher rates) it's going to ravage the fiat currencies. Gold, silver and real assets will be in incredibly high demand and the only safe place to preserve wealth.
They could start by buying all those 'stressed' bonds now carrying a -ZZZ. By the time they work their way up to tripple A we should be fine. Somewgere along the way we can assume they will have to buy everything in between....including save Apple and...I dunno ...what ever all the pension plans hold.
"if u kill enough bankers u increase the happiness of the world...."
- Kaiser Sousa -
If you print money you get no inflation if that money just sits on the banks' balance sheets and never enters the economy. Where we do get inflation is if that printed money starts getting loaned into the economy through the process of fraction reserve banking. In other words, that printed money gets multiplied by at least 9 times, over and over again. At least 95% of all money on earth was loaned into existence through this very process. That's how we got to this insane level of $600 trillion worth of derivatives (all of it on borrowed money, with bonds as the collateral for those loans). That's what causes inflation Mr. Preat... and it ain't happening these days.
The cork has popped off the bottle and the deflation genie has escaped and there is no putting him back in. The only thing the bankers can try, and they will, is to continue to print money until their heads explode... more QE. And they surely will. Eventually it will work and the Dow might hit 50,000. In the meantime, the USD will be almost worthless and gold will be at $5,000.
Deflation first... then inflation and the destruction of every currency on earth. The USD falls last.
Egggzactly and this means that they are in control, we all are collectively "their bitch" and we will be on our knees likely for a generation or 100 depending on how well the Huxley to Orwell conversion goes.
That is their plan.
The real economy in all this is going into the wood chipper if it doesn't fail fast enough we all lose as they will sew us up in a blankey and cut the hole.
This is Cask of Amontillado stuff right here and we can joke with them and plead with them as they brick us up and it will not make any difference.
The boot to the face meme is in full implementation phase.