Yes, The ECB Chief Economist Really Said It: "If You Print Enough Money, You Always Get Inflation. Always."

Tyler Durden's picture




 

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."

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Wed, 01/06/2016 - 11:55 | 7005172 ejmoosa
ejmoosa's picture

The inflation is concealed.  Oil could be worth 25$ based on real supply and demand.  Yet with inflation that is hidden, it's around $35.  

These Central bankers have no way to tell.  

Wed, 01/06/2016 - 12:01 | 7005204 TwoHoot
TwoHoot's picture

Low or negative inflation causes money printing.

Stick to the facts and the truth will be revealed.

Wed, 01/06/2016 - 12:03 | 7005215 youngman
youngman's picture

This is the second Central banker come to Jesus moment in the last two days...strange...

Wed, 01/06/2016 - 12:04 | 7005225 Omega_Man
Omega_Man's picture

these guys crack me up... 

Wed, 01/06/2016 - 12:08 | 7005253 Omega_Man
Omega_Man's picture

the plan of course is to give the advantage to all the zios, give them money at zero percent to buy all the hard assets... then later wreck the system with hyperinflation.

 

then act like a hero with a new fiat currency, while all the zios hold all the nice hard assets. 

 

perfect plan

Wed, 01/06/2016 - 12:15 | 7005295 Panic Mode
Panic Mode's picture

Is he Paul Crookman's cousin?

Wed, 01/06/2016 - 12:33 | 7005392 nakki
nakki's picture

It all should be taken in context. Inflation in equities, certain zip codes, healthcare and the cost of an education. Deflation in what your fiat is worth relative to what it used to be. More fiat always means more debt is what the dude should have said. Its really that simple.

Wed, 01/06/2016 - 12:41 | 7005446 THE DORK OF CORK
THE DORK OF CORK's picture

Try not to use their language.

Inflation,  deflation etc.

These are monetary terms.

Try to ask very very simple questions.

Why cannot people afford to consume production.???

Why is most of the energy lost in distribution and depreciation? 

 

Look at the physical economey without the monetary prism and ask yourself why it does not work.

Wed, 01/06/2016 - 12:45 | 7005477 LawsofPhysics
LawsofPhysics's picture

precisely why monetary systems that detach from reality do not last.

Hedge accordingly.

Wed, 01/06/2016 - 13:16 | 7005641 GreatUncle
GreatUncle's picture

Yep.

You can argue consumption is the inflation and the energy lost the deflation.

SO consumption < energy lost so deflation is winning.

Wed, 01/06/2016 - 12:41 | 7005455 Niall Of The Ni...
Niall Of The Nine Hostages's picture

He missed a step. If you print money and give it someone at all likely to spend it, that's when you get inflation. 

Long-suffering Europeans would be glad of a tax cut financed with bank-confetti from Frankfurt. You might even see wages start to rise. Imagine that.

Not that that's at all likely. In Europe only Muslims and Greek kleptocrats get something for nothing. Everyone else coughs up half their pay in tax.

Wed, 01/06/2016 - 12:49 | 7005515 K_BX
K_BX's picture

you can print as much as you want - if the economy is leveraged up to the hilt & credit demand doesn´t increase due to overcapacity on all fronts you can kiss your inflation goodbye.

Wed, 01/06/2016 - 13:00 | 7005562 harrybrown
harrybrown's picture

stack now thats includes water & food / ammo

This will turn very ugly very quickly with little if any warning... the clock ticks

The best prepping i would suggest is to "scrub the zio's off the face of the earth"
and smile while you do it ;)

Wed, 01/06/2016 - 13:07 | 7005608 Herdee
Herdee's picture

They believe that inflation of the money supply creates jobs.It might for a short time until the next bust which always comes.It is such a dumb model which treats investors and the general public like shit.Boom and Bust.

Wed, 01/06/2016 - 13:13 | 7005625 conraddobler
conraddobler's picture

It's like shrinking a ruler to make your dick look bigger using cryo freezing techniques that also causes your dick to shrink too just not as much as the ruler and calling that a win.

You have to be fucking retarded to think this is a positive idea for mankind.

Thu, 01/07/2016 - 04:24 | 7009582 css1971
css1971's picture

Mankind? LOL.

You are a debt slave, you exist to serve. The purpose is to extract wealth from you.

Wed, 01/06/2016 - 13:13 | 7005630 GreatUncle
GreatUncle's picture

Find the article amusing, hand a trillion dollars to somebody who is not going to spend it will only ever get 0% inflation and think that is obvious.

Now you give it to someoby who will spend it !!! Then you get inflation.

They always do the first not the second.

Wed, 01/06/2016 - 13:22 | 7005665 Apocalicious
Apocalicious's picture

It's difficult to tell when or how much, but if you print it, it will come. 

Wed, 01/06/2016 - 13:25 | 7005678 Who was that ma...
Who was that masked man's picture

The printing of money, by definition, IS inflation.  Inflating the money supply MEANS printing money.  DUH!

Wed, 01/06/2016 - 13:34 | 7005722 moneybots
moneybots's picture

"If you print enough money, you always get inflation. Always."

 

A rather meaningless statement.

 

100% of cycles have an up phase and a down phase. There are no exceptions.

If you stop a clock, it is always right twice a day. Always.

Deflation follows inflation, to complete a cycle. A deflationary collapse will be followed by inflation. The 1930's deflationary collapse was followed by inflation.

 

Wed, 01/06/2016 - 13:46 | 7005774 moneybots
moneybots's picture

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."  

 

What happened after
Weimar hyperinflation?

What is the current level of the German stock market compared to where it was in November 1923?

Wed, 01/06/2016 - 13:57 | 7005805 falak pema
falak pema's picture

the whole deal is to get hyperinflation in the world economy drowning in debt all over.

Print, print, print and let debt DILUTE itself.

This whole strategy of monetary can kicking by banks resides upon the PREMISE that the resultant kick start to monetary liquidity will generate a real GDP growth rate superior to interest rates.

Only problem : today the structural debt is such that there is no response by the real motor which creates growth : Investment; as there is no return on investment. So consumption and government spend on just keeping the current account afloat does not resolve the investment problem necessary to create ROI superior to interest rates; whence the negative rates in ECB !

It a snake that eats it tail by the looks of it; awaiting that all commodities sink to zero cost. Which means half the world dies in order to save the other half!

Or, we have a big bang of debt... and the fall out will be what it will be.

 

Wed, 01/06/2016 - 14:51 | 7006083 Lady Jessica
Lady Jessica's picture

"Or, we have a big bang of debt"

I think what we'll get it a big gang bang of debt, alas.

Wed, 01/06/2016 - 15:03 | 7006136 falak pema
falak pema's picture

well i wouldn't say that given whats happened in Koln.

But you are probably right!

Money is a woman that hates to be scorned.

Wed, 01/06/2016 - 14:44 | 7006043 Bopper09
Bopper09's picture

Plan A: Print money

Plan B: Print more fucking money

Plan C: Print fucking money, MORE FUCKING MONEY!  These fucking retards still believe it's worth something!

Wed, 01/06/2016 - 15:18 | 7006236 surf@jm
surf@jm's picture

What an ignoid....

If that printed money is funnelled into equities, bad real estate loans, and bigger government, the only inflation you get, is in equities, real estate, and government......

Bubble head......

Thu, 01/07/2016 - 04:12 | 7009570 css1971
css1971's picture

Zero inflation would be good. My monthly train ticket just increased in price... again...

 

Funny I don't seem to be the one who's getting access to all this new money they're printing. Just went to the wrong schools I suppose.

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