Posted on 01/15/2017 9:39:20 AM PST by Olog-hai
The European Central Bank should begin winding down its expansive monetary policy in 2017 as inflation returns in the eurozone, German Finance Minister Wolfgang Schäuble said in an interview on Friday.
“It would probably be right if the ECB starts daring to head for the exit this year,” Schäuble told the Sueddeutsche Zeitung newspaper — although he acknowledged it would be a “difficult task”.
The ECB has fixed interest rates at record lows in the 19-nation single currency area, as well as offering cheap loans to banks and buying up tens of billions of euros per month of government and corporate debt.
The moves are designed to make more cash from the financial system available to the real economy, powering growth and investment and driving inflation towards its target of just below 2.0 percent. …
(Excerpt) Read more at thelocal.de ...
The ECB masterminds don’t have a clue how to unwind negative or near zero interest rates. This will end worse than it began.
The European Commission’s top economists warned the politicians in the 1990s that the euro might not survive a crisis, at least in its current form. There is no EU treasury or debt union to back it up. The one-size-fits-all regime of interest rates caters badly to the different needs of Club Med and the German bloc.Anything to cause enough pain to make another power grab seem inevitable.
The euro fathers did not dispute this. But they saw EMU as an instrument to force the pace of political union. They welcomed the idea of a “beneficial crisis”. As ex-Commission chief Romano Prodi remarked, it would allow Brussels to break taboos and accelerate the move to a full-fledged EU economic government. …
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