ECB under pressure to abandon superior policy stance

Balls of euro banknotes

The European Central Bank is under pressure. Inflation in the eurozone is at 0.7 percent but as Ben Bernanke supposedly stated, we are never sure if we measure these things correctly. So by all we know, the eurozone may already be in mild deflation. This should come as no surprise. The eurozone has practically had zero money growth and zero growth in lending for some time. As reported today, growth in the M3 money aggregate fell to a snail’s pace of 0.8 percent year-over-year in April. Loans to the private sector are 1.8 … [Read more...]

No end to central bank meddling as ECB embraces ‘quantitative easing’, faulty logic

Mario Draghi, ECB (photo by IMF/Stephen Jaffe)

“Who can print money, will print money” is how my friend Patrick Barron put it succinctly the other day. This adage is worth remembering particularly for those periods when central bankers occasionally take the foot off the gas, either because they genuinely believe they solved the problem, or because they want to make a show of appearing careful and measured. The US Federal Reserve is a case in point. Last year the Fed announced that it was beginning to ‘taper’, that is, carefully reduce its debt monetization program … [Read more...]

What is wrong about the euro, and what is not

Photo of Angela Merkel

Every Monday morning the readers of the UK’s Daily Telegraph are treated to a sermon on the benefits of Keynesian stimulus economics, the dangers of belt-tightening and the unnecessary cruelty of ‘austerity’ imposed on Europe by the evil Hun. To this effect, the newspaper gives a whole page in its ‘Business’ section to Roger Bootle and Ambrose Evans-Pritchard, who explain that growth comes from government deficits and from the central bank printing money, and why can’t those stupid Europeans get it? The reader is left with … [Read more...]

All power to the state! – Money madness at the IMF

IMF headquarters

You cannot escape an all-pervasive sense of crisis these days. Impending doom does not only announce itself in actual events but also via the proliferation of ever more hair-raising schemes that claim to solve our problems. Maybe it should not surprise us if, at a time when the world’s most powerful central banks keep interest rates at zero for years on end and keep printing quantities of money that are simply outside the facilities of human imagination (trillions? quadrillions?), bravely hoping it will end differently this … [Read more...]

We are on the road to serfdom

Road

We are now five years into the Great Fiat Money Endgame and our freedom is increasingly under attack from the state, liberty’s eternal enemy. It is true that by any realistic measure most states today are heading for bankruptcy. But it would be wrong to assume that ‘austerity’ policies must now lead to a diminishing of government influence and a shrinking of state power. The opposite is true: The state asserts itself more forcefully in the economy, and the political class feels licensed by the crisis to abandon whatever … [Read more...]

No way out – Why policy advice is futile, and what you should do instead

G7 Finance Ministers, anno 2008

First of all, apologies appear to be in order. Over the past six weeks, my commentary on the Schlichter Files was somewhat sporadic. I spent most of the summer with my family in Italy where I voluntarily removed myself somewhat from the fitful convulsions of the financial system's death-throes. Then, last week I attended the world conference of the International Society for Individual Liberty on the island of Vulcano where I gave a speech on my upcoming book. The conference was a very pleasant affair with many interesting … [Read more...]