Silvia Wadhwa is in Frankfurt with more on the meeting between US Treasury Secretary, Tim Geithner, Wolfgang Schäuble, Germany’s finance minister and European Central Bank President, Mario Draghi. Here is s direct link.
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Print lots of currency or just a little of it – is a RED HERRING.
In free society Money should be determined by free willing market participants. Be it digital, colorfully printed paper, grain, or metal.
If money printing is so beneficial to society, then ALL of us should engage in printing, or even better, digital printing of currency.
$ $ $
Today banking and gov-s are engaged in mass counterfeit operation.
Other entities would be jailed if they followed the same practices.
Governments and bureaucrat mess up with the currency because it gives them power over society and its resources.
We are beyond the point where a quarter point rate cut will achieve anything. Nor will it help to launch a fresh round of “temporary and limited” bond purchases – to use the self-defeating language that Mr. Draghi is forced to utter.
The only issue that matters at this late stage is whether Germany is willing to let the ECB step up to its responsibility as a global central bank after two years of ideological posturing and take all risk of sovereign default in Spain and Italy off the table – which it can do easily enough once it stops playing politics and obeys the “financial stability” clause (Article 127) of the Lisbon Treaty.
Nomura says the combined needs of Spain and Italy amount to €1.1 trillion over three years. The money does not exist. Any attempt to raise such sums on the open market would expose the bluff behind the bail-out machinery.
The ECB funding trillion Euro in debts is good, very good, for creditors that took a bet on owning said debt obligations.
But, such actions are dillutive and harm savers.
Worse, paying with newly created money amounts to theft (more politely: exchange of nothing for something).
I fail how is that right. Nor, how would it help for long haul.