“A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation,”
Draghi: “we aren’t there yet”
“Political winds are becoming tailwinds,” he said. “There is newfound confidence in the reform process, and newfound support for European cohesion, which could help unleash pent-up demand and investment, if confirmed by decisive action.”
The economic and political illiteracy of the ECB's aristocrats is mind-blowing. These bigheaded, corrupt bureaucrats think they are able to control inflation.
The more they lower the rate of interest and the more money (stimulus) they use for buying bullshit bonds, the more uncertainty and instability they create . This could lead (anxious or cautious) people to save (or very evil: hoard) money and thereby push deflation.
But for this problem Keynes / Krugman / Draghi have a simple solution: print more money and lower the interest rates even more.
I am very curious about the future "European cohesion"...
nice post ..........@roy2016
@hariish
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Actually Keynes was critical of the banks because they had a habit of hoarding cash used for the bailouts and didn't lend it to small businesses as they were supposed to (see a pattern here? we need to learn from history, banks will keep the cash each time they're bailed out). Keynes would have supported the money being used to directly assist the populace of a Country or political Union not the bankers.
The EU is trying to force full European integration on everyone, so European cohesion is their phrase meaning to bring everyone together. This is being achieved by making it seem as if Brussels is trying to assist them and is good for them. The Euroscum are just Nazis to me, they're bullies and they're using money to manipulate morons into believing that it's ok to gas the Jews and gays (not literally, although who knows given tactics used by pro-EU scum?).
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Regarding Keynes you are right. But did he ask himself why the banks hoard cash after bailouts? IMHO after bailouts there is a climate of economic and financial instability and fear. In such a situation it would be risky for banks to lend money to small businesses (which have a much higher rate of failure).
For me the root problem is the bailout itself. If a bank proves to be insolvent, it should vanish into thin air. The losses have to be borne by the central banks, the companies and the individual people who gave money to this bank (=who had too much trust in this bank).
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Of course they're worried, which is why they hoard the cash, but refusing to lend money to small businesses becomes a self-fulfilling prophecy as those small businesses are then pretty much guaranteed to fail without getting the appropriate funds. At least if those that can show they were operating well enough until the crash were given some assistance, they could have avoided liquidation or whatever and had carried on.
I do agree that the banks should have been allowed to collapse, or even have been broken up and made into local or regional banking operations instead, as they thought they were guaranteed protection by Government and the Central Banks and they acted like it. If they were told that they would be held accountable and any disruption of the financial system/economy would result in their bank's closure, they may have acted differently. I would prefer the banks being broken up rather than being allowed to completely collapse because a lot of people depend on the banks (customers, as well as employees) so being broken up would take away the 'power' from the banking group executives and show them they're not above the law and can be given a kicking by the Central Bank or Government.
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