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ECB's Weidmann Spoils The Party: Says Leveraging EFSF Violation Of EU Treaty, Warns Of Hyperinflation
Trust the Germans in the ECB (those who have not yet resigned that is) in this case Jesn Weidmann, to come in and spoil the party:
- Weidmann, speaking in Berlin, says hyperinflation shows why monetizing debt wrong
- Prohibition on monetary financing an important achievement.
- Euro treaty rightly forbids monetary financing
- Stable prices should be key goal of ECB
- Leveraging EFSF with currency reserves prohibited
- Says monetary analysis may gain importance at ECB
And for all our MMT friends:
- "One of the severest forms of monetary policy being roped in for fiscal purposes is monetary financing, in colloquial terms also known as the financing of public debt via the money printing press:” Weidmann
- Pohibition of monetary financing in the euro area “is one of the most important achievements in central banking” and "specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I"
Summary from Bloomberg
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Leverage is GREAT. Another excuse for the bulltards to pile in..
the EU treaty was BUILT in order to specifically PREVENT what the EU is presently trying to do with it, which is to bail out profligacy with printed money.
In fact, nearly every nation in the fuckin union outright CHEATED on deficits by signing swaps to GS and the other confettiers in order to bring present deficits down at the expense of an EXPLOSION in them later (now).
These deficits didn't materialize out of nowhere, they were engineered to happen. Nobody availed themselves of this more than Italy did. The EU is dead simply because the budget tricks and cashflow swaps that the nations signed to gain entry are now coming due and the growth hailmary that HAD to happen to keep them solvent did not come to pass.
In fact, amazingly, the nations who KNEW they signed away future cashflows and signed onto massive future expenditures as a result of these swaps, continued to behave as if their deficits really WERE what the lies said upon EU entry!
Yea exactly, treaties mean nothing. This is a perfect display of it, doing the exact opposite of what all members signed onto.
"specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I"
Damnit, just when we had waited long enough for most all the hyperinflation survivors to die from old age, he has to go and bring that shit up again. What's a central banker to do?
Send him a bathub, preferably one of questionable Chinese make.
I'll either be trading DMs within a few years or looking at 10k gold.
Right you are. Just wondering...who references the Weimar Republic more, Germans or Americans?
Probably both.
Since when has the EU followed its own rules (or listened to its citizens when they vote, for that matter)?
The EU is just the central kernel of the Globalist experiment. I wish the world could recognize the fact that the EU is the model for consolidation of power in the modern western world. It is based on deception and control. It is ruled by the worst kind of pernicious politicians in the world. It will fail eventually, but not before it takes the meager prosperity of many Europeans with it.
+100
Democracy is in the process of being destroyed in the EU - permanently. And not one leading politician has the backbone to say what is really happening.
Snails and slugs get squashed under jackboots. That's next.
Democracy was always a facade to get the great unwashed masses to voluntarily hand over their freedom, rights, etc., to consolidate it all under one roof.
Now the trap springs, power neatly packaged with a bow, ready to be used by those in charge.
The masses will never get it. Freedom & Liberty actually don't suck, and their are the polar opposite of large central power structures, and certainly not symbiotic actors.
That is exactly right, Trav. It was designed to happen.
The Maastricht rules have very specific limits on government debt and budget deficits for euro member countries, and if they exceed those limits, countries like Greece would have huge fines to pay. So, beginning in 2002, Greece brought in Goldman Sachs to "help" hide their deficits, using complex financial products like cross currency swaps to push their liabilities into the future (now), and dress up their balance sheets. In other words, Goldman Sachs was brought in to help Greece cheat, circumvent the rules and fuck up the world at a later date.
Now, for governments to use cross currency swaps is not necessarily uncommon, but what's particularly amazing in this Greece/Goldman plan is the use of FICTITIOUS exchange rates. They basically crafted bullshit swaps, used fictitious (hopeful) exchange rates and turned these swaps into a $1B credit. Pooof! Just like that, they slice and dice a euro of debt into multiple euros of credit. That's what Goldman does. They take a unit of debt and extracts from it a pyramiding tower of new credit and money. Plus, these swaps - according to the Maastricht rules - can be moved OFF the balance sheets and hidden from the eye of regulators.
And now, of course, the debt is due and the entire european union is on the brink of unraveling, because for every one unit of actual debt there lies a pyramiding tower of credit built upon it. It's a trillion dollar Jenga game. Just another fine example of Goldman Sachs bringing this world to its knees. This isn't God's work. It's the handiwork of thieves and of devil's minions.
You know, it's really fascinating to see Goldman Sachs in the "middle of all these complex, highly leveraged, exotic trades [they] created, while the entire building collapses."* With so many implosions happening nearly simultaneously - whether it's super spike oil and GSCI to strike the match, or housing CDO's designed to implode, or obnoxiously aggressive collateral calls on AIG or the euro, et al. - and to see Goldman Sachs always in the middle, it's difficult to ignore that this wasn't all deliberate. Of course, the icing on the cake is the fact that Goldman's CEO gets the Treasury job right before the whole house of cards comes tumbling down.
Max Fischer, Civis Mundi
*quote from Fabrice Tourre
Treaties, bailouts, swaps, firewalls etc are all systems of postponement. We need a system that is designed to be as fail-fast as possible. If it will fail or should fail, it must fail immediately.
Examples of fail-fast system design:
1. The day Greece hands in its Euro membership form (or even thinks about it), it immediately becomes bankrupt, all its luxury yachts sink, and all government payments cease
2. Six sigma debt markets: as long as there is a 1-99.99966% risk of writedown, principal and interest immediately becomes due
3. Currency without intrinsic value becomes immediately worthless and vaporizes in the hands of the issuer in a violent ball of fire (instead of circulating for 40 years)
4. All cans on the roadside weigh 10000 tonnes and kicking the can causes immediate foot pain with no side effect on the can itself
5. Wearing a tinfoil hat causes immediate suffocation
Knowledge of such principles will then guide markets. Of course, some people will still try to join the Euro, kick cans and wear tinfoil hats and we neither can nor should do anything about that.
'Treaties? We don't need no stinking treaties.'
EU Treaty? Bah....just ask a Native American about how good your treaties are.
You mean those Indians with those tax free casinos?? hahahahahahah
'Tax free casinos' LMAO
'Hey sorry we wiped out your people and all that, heres a tax coupon and some cigarettes.'
And the tax free cigs, and the trade er, cough, cough, smuggling, concession between the US and Canada?
And the Fire Water.
"Fire water, that's what you want, Tonto. Fire water."
You should read up on some of the desolate reservations in the Midwest and southwest. Then maybe you'd develop a bit of compassion.
when you put primitives in a house and clothes, they're still primitives.
The injuns are living as they did 400 years ago...THIS is how their lives were then, brutal, short, primitive. Not like the introspective peace-loving noble souls depicted in stupid movies.
Native populations everywhere have similar issues, aborigines in Australia and subsaharan Africans are other examples. Everyone just expected them to happily jump on the bus of civilization and integrate right into ways of being that weren't within them?
If they were civilized, THEY WOULD HAVE BEEN CIVILIZED. Columbus would have landed to ports, ships, the wheel, written words, the iron age, etc. Biological evolution of disparate populations does not proceed at uniform rates.
Coming from a cherokee and shawnee indian family bloodline (my great-great grandmother died on a reservation), I strongly take offense to this.
Fuck you.
I usually enjoy your rants...even IF I disagree.
Trav looks in the mirror and always likes what he sees.
That is, as long as its a uniform solitary reflection. AKA - the packet internet groper.
Mahatma Gandhi, when asked what he thought of Western civilization - "I think it would be a good idea."
Aside from touting genetic determinism - are you also touting the right of "the strong" to wipe out "the weak" - i.e. social Darwinism?
If you are - then there is NO civilization possible in your "philosophy" - only perpetual war - and thus no need for any dialogue, blog reading, debate or commentary - in which case any terrorism would be as valid as any colonization.
You see where this is going...?
The alternative of course - is compassion, help and dialogue - so please do let us know if you are in favor of speeding up and synchronizing "biological evolution" - or I'd rather say social evolution - or not?
You might educate yourself a little on this. Ogden's "Guns, Germs and Steel" is a good place to start. You might already be familiar with his "Collapse". I suspect we will all be very familiar with its content in the not-too-distant future.
Ogden says, briefly, on my reading, that there's a reason peoples develop at disparate rates, and it's not because some races are dumb fucks and some are the Chosen Ones. It's resources. That's all.
Jared Diamond was the author not Ogden.
http://en.wikipedia.org/wiki/Guns,_Germs,_and_Steel
"If they were civilized, THEY WOULD HAVE BEEN CIVILIZED" said the aliens landing in Europe 200 years after the fall of the Roman Empire.
Pay no attention to the extensive trade empire known as the Mississippian culture. Pay no attention to the copperworks found there. Pay no attention to the extensive engineering empires in Latin America, where the Aztecs build a freshwater Venice at the top of the world, complete with aqueducts. You think these people had NO contact with each other? You think they had divergent evolution during the few hundred years after their trade routes collapsed?
Pay no attention to the disruptive emergence of horses after Spanish colonization, and the sudden movement to nomadic lifestyles by the people of the Plains.
Pay no attention to the fact that the alphabet wasn't created until AFTER the land bridge to America disappeared, and that any culture without a written language is going to advance more slowly.
No, no. Only look at the surface, with as much normalcy bias as possible. It looks like this when we got here, therefore it has always been like this. The Venus Demilo was made without arms. The Romans were idiots who built nothing but ruins everywhere. There was never a seafaring civilization in Southeast Asia.
It's all in da jeans, I sez! Nutin ta du wit cultur, edumacatunz, ur dem der natrul rites.
I wonder if you took an internet IQ test and scored high, and then thought that meant that from then on you could just never bother to analyze anything, and assume that you are always right about everything, no thought or analysis needed? As if IQ means anything to an adult. Here's a hint, dumbass--IQ indicates the rate of uptake and integration of knowledge. If you have a high IQ, but refuse to learn anything new, then you are no better off than some welfare mammy on a reservation.
Trav7777: Ignorance and bigotry still prevails among those who are not as evolved as they seem to think they are.
Trav,
Let me guess, this totally fucked up planetary environment and criminal time-bomb-in-the room-with-everybody financial system is "civiliation"? We're the winners? This is the best ever?
I lived and worked on the Navajo res. for 2 years as a physician.
Indigenous peoples everywhere have had a deep understanding of what it means to be human, and part of a living ecosystem.
This is not the noble savage argument.
I'm just saying, it's like that. It's ordinary. It's real. If it is not who you are, you won't get it. It isn't just cognitive, either.
Intelligence is completely situational. Monkeys are stupid in the middle of the ocean. Dolphins are stupid in trees.
I wouldn't be very smart in the middle of the Arizona desert, naked. How about you?
You forgot all the free blankets we gave them!
..along with small pox.
Bed bugs anyone?
ROTFL...ask the natives how good THEIR peace treaties were.
The injuns were in a constant state of war with each other
hmmm.... kinda like the goyim.
the joos have been in a constant state of aggression with the entire planet, as written into their holy texts
Like the protestants and Catholics; like the Canaanites and Israelites; like cats and dogs; like men and women; like Democrats and Republicans.
Douche.
One of the drivers of the War of 1812 was to prevent the formation of an allied Indian nation south of the Graet Lakes to stop the eastward migration of the Amercian colonizers. Tecumseh who was spearheadig the diplomatic and military alliances eventually was killed in battle when his Britih allies abandoned him. The British request for Temseh's indian nation was dropped from the Peace Treaty between Britain and the USA when the Brits were routed in New Orleans. Although defeated Tecumseh is memorialized at the US Air Force Academy for his miiiltary genius.
The problem with digital money is... when hyperinflation kicks in you can't wipe your ass with it
Or heat your home...
Top comment! I collapsed laughing at that one.
Do not try and wipe the ass. That's impossible. Instead.. only try to realize the truth.
There is no poop.
and if you do,... please only use your left hand
In the absence of real dollars I recommend we burn Bernanke.
Who cares about a silly little Treaty?
so he has the same view as weber. maybe he should resign and go and run commerz...
What? You mean they are playing fast and loose with something as important as the money system?
Weidmann, speaking in Berlin, says hyperinflation shows why monetizing debt wrong
WOW! Please, please shout that in the ChairSATAN's ear!
In fact, didnt Bernank SWEAR before congress tht he certainly would NEVER monetize the debt!
Yeah, but he didn't say NEVER EVER, and furthermore, he had his fingers crossed behind his back.
So that's alright then.
uhhhh..... he misspoke *cough*
Someone beat me to the fingers crossed thing.
SPANK THE BERNANKE!
A transitory comment.
It's established Bernanke is a liar and a thief.
The Fed cannot monetize the debt, per se, because they have to issue FRN's to buy anything. FRN's are still debt. When the privately-held Fed buys Treasuries those Treasuries still exist. True monetization would be printing United States Notes and then buying Treasuries.
That's what any central banker DOESN'T want to have happen.
I argue the FRN is a derivative.
Treaty violations are bullish in the 21st century
As is violating contracts
What do the Germans know about hyperinflation, anyway? /s
Inviting hyperinflation would be grounds for Germany to withdraw from the Eurozone and its citizens will vote a candidate into office that will see their constitution honored.
Bullish!! BTFD
I don't want any of those F-ing Dips.
The PM sale is just about over; you'd better hurry.
And sure enough, Italian yields jump undoing all of the ECB's 'Good' work today.
6.698% @ 15;45 Irish Time.
http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND
Someone check his accounts and see how large his short bets are.
Or check his shorts and see how long his skidmark is.
I am sitting in ambulatory surgery waiting for my daughter to be taken in for her tonsillectomy, I keep busting out laughing at these comments. The nurses prob'ly think I sipped on her 'happy juice.'
Or perhaps your screen name offers a clue?
Good luck to you and your girl. Tonsils out so much of the time stops whatever is recurring (for me it was being ill all the time, ringing in my ears, it made a huge difference).
Germans may be sheeple when it comes to stealing from them, but break the rules? Achtung!
Stop this ride I wanna get off. :-(
Stop this planet, I want off!
Dow down 100 points on it. 70 or so more down and then it can resume the Kabooki Theater and ramp up around 1:30pm and close at the days high of +90. You can set your watch by the market manipulation.
And again wiping out all longs stops....LOL...dang hard to be a bull these days huh?
I can't believe that even this is bullish.
Will Germany just leave already, if they want a hard currency it will only be for them.
Most of Europe including France have only known inflation and revaluation cycles.
They are just playing to form.
Why is it a surprise?
What is the German for Quadrillion?
Ein wheelbarrow.
Things getting interesting with israel?
Sarkozy called Israeli PM Netanyahu 'liar'http://www.bbc.co.uk/news/world-europe-15635476
Cusp of WWIII?
Merkozy says rules are for losers and ignores them with a dismissive wave of the hand
Weidmann may very well just be lynched -- who wants reason and restraint at this late stage?
No. The private central bankers want their odious sovereign debt paid back through austerity and pain. The people SHOULD want an outright default of the debt held by bankers and some printing of a sovereign currency. He is a central banker talking the book of his peeps.
Why do sovereign nations borrow in the first place?
Does that mean its not ok Spider?
Bernanke needs to teach these german some serious princeton economics. Inflation isn't a word in the english dictionary, greens shoots has long replaced that word.
Yea well the Germans a month ago told Geithner to go fuck himself on all that.
...so much noise my head is exploding
I think they misspelled this guy's name, clearly he is a WILDMANN...not that I can tell whether Jesn is a male or female name.
The problem for Germany is, they never lay a clear plan on the table, just fulminate and bitch about all the crap France and Golden Sacks keep making up. Obviously they can make up crap faster (and furiouser) than Germany can fulminate about it.
So a 'market event' or political event will have to stop the circus. Will it be Italy or Greece coughing up a lung? Maybe it has to be. A strange spectacle.
Hey Germany: what's the fucking PLAN????????
have no fear, common sense has not reared its ugly head. within minutes this story will be denied, rewritten or "clarified" and then purged. Weidman will then be disavowed and forced to resign his post, never to be heard from again.
Well, at least one person gets it. Congratulatins, Herr Weidmann, but your humanity is not shared with your central banking brethern.
I was very sceptical of Weidmann at first. But he has done a good job so far. And he is right. It is not responsible to monetize debt. And he defended our Gold reserves (and adviced Merkel not to hand them out).
I just wish we would have listened to Professor Wilhelm Hankel and never joined the EUR-Project in the first place. The DM was a good and hard currency and it still allowed us to export a lot (just see the record years 1986-1989). A currency union of the North - that would've been acceptable to me - even with some East European partners.
You accept the fact that your sovereign government has granted a free license to print money to private banks and then pays them interest to borrow said currency from them? And then borrows more from them at interest to bail them out?
Alrighty...
The Euro is a crackpot currency based on crackpot politics and backed by crackpot economic theories and practice. And now that the crackpotery is nearing its end the terrible results are beginning to show, everybody will blame it on those who saw it for what it was. I fear that in the long run, Germany, Finland and the rest of the countries that behaved responsibly, will be blamed for the mess more than the ones who created it. Germany must leave the Eurozone before it i too late for them, and thus force the default of the deadbeats before it is dragged down the shit hole with the rest of them.
What a Deadbeat Wiedmann is.
Party Pooper.
What's a couple of quadrillion between friends? This is bullish for ink stocks, because they'll waive or simply ignore the rules, and print anyway. CME will hike up margins, because it's all printed money anyway...it's all bullish man.
From one of your MMT friends:
Weidmann is bonkers.
See Cullen Roche's history of MMT predictions about what would happen to the EMU at Pragmatic Capitalism, MMT, THE EURO & THE GREATEST PREDICTION OF THE LAST 20 YEARS?
Best regards,
Tom Hickey, contributor at Mike Norman Economics
First post (with humility)
"Monetary Financing"...how polite.
Well, QE has become a bit tiresome. MF has a nice ring to it.
I think MF got taken out of the candidate acronym pool last week.
So there still are a few Germans who haven't lost their minds in this euro farce.
Look, these guys were hiding deficits in order to steal money for friends, family and associates alike. It runs deep within these countries. The rest of it is just window dressing.
Germany - The Biggest Debt Transgressor In History....
http://germanywatch.blogspot.com/2011/11/germany-biggest-debt-transgressor-in.html
Systemic and escalating abuse and fraud, yeah that's the ticket. What's in your central bank?
silence this seditious bastard for the good of the europa union
he should be arrested, comrade BiCheZ!!
The more I look at US debt crash correction and future gold/silver charts,
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...
http://www.tfmetalsreport.com/comment/78024#comment-78024
http://www.tfmetalsreport.com/comment/78025#comment-78025
Something does not fit with end of 2013 or beginning of 2014 being the date of US debt crash correction. So the anwer could be:
that defaults of USA Treasury to FED will happen in discrete (DISCRETE as in DISCRETE scale, not as in discrete presence) way starting from November 2012,->and that is the reason of Gold price connection with this election cycle, then FED buys more, then Treasury defaults again etc. It will be kind of a new "permanent" way of handling country debt and monetary issues combined.
I just wander what other consequences it will bring to USD value ( vs. commodities, other currencies), will it become fashionable way to handle part of debt in every country (except Europe where partial debt corrections happens as country by country defaults as there are no local central banks). Than of course every countries currency will devaluate in a similar manner to the USD except that USD will still be sitting on bank balance sheets even if they will receive a default in JPY ( e.g. Japan). So despite US correcting its debt to FED , USD still will have the longest (one of the longest ) lifetimes among currencies. The currencies that can outdo USD will be those where total government debt and other debt in the economy is small relative to GDP, and where USD etc is not too prominent on the balance sheet of central bank.
Also, does it MEAN Ron Paul can make it to president with coming recession etc and consequently exploding debt? Or his idea will be stolen by Obama?
"Congressmen and Presidential hopeful Ron Paul, who chairs the House sub-committee on monetary affairs says the Fed should not be holding this “ficitious” debt any longer against US tax payers."
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=860#p35004
Tyler, once again you demonstrate you don't actually know anything about MMT beyond how to spell it. Could you please do more than 30 seconds of research on it one day so that you stop misrepresenting it to your readers? Your continued ignorance on this matter must inevitably create a lot of unnecessary risk in your portfolio (just ask Bill Gross). I know high finance is not exactly an easy topic, but it's worth making the effort. I am more than willing to help you or any of your readers understand it, so just let me know if you have questions.
The situation in Europe says precisely nothing about MMT, because it is not applicable there. MMT applies to currency issuers, not currency users. In a true MMT situation the govt does not need to borrow to fund its operations because it issues its own currency. Since govt spending is not funded by bonds then there is no "debt" to "monetize": the govt just spends. In the US, the Treasury/Fed then turns around and issues bonds to soak up the excess reserves created by govt spending, but that could easily be done in other ways. Nothing about the process requires the issuance of bonds; the only requirement is a political/social one, dating back to the gold standard. The US govt hasn't needed to borrow money since 1971.
(As an aside, Weimar says nothing about MMT either. The German govt during that time had significant constraints on its operations due to the Allied Powers' post-war occupation of Germany and the reparations they demanded in the Treaty of Versailles. MMT requires a truly sovereign govt, and this does certainly not describe Germany in the 1920s!)
Germany doesn't want to go along with this, they see it as it is. It's to bailout the big banking elites and the EU/euro/elite club that don't want to take their medicine. They have overreached this time and it may cost them.