Bloomberg
More Inflation Is the Cure for the Fed’s Impotence.
PIGS have to stay impotent since there is no help from the ECB with higher inflation and unlimited credit.
Friday, 22 February 2013
Friday, 15 February 2013
Difference between Fed and ECB
Difference between Fed and ECB
The Fed's mandate is "to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates." The ECB has no mandate to promote high levels of employment. The result is very real with 29 million unemployed in Europe.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
The Fed's mandate is "to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates." The ECB has no mandate to promote high levels of employment. The result is very real with 29 million unemployed in Europe.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
EMU countries are dollarized in terms of the Euro (Deutsche Mark)
EMU countries are dollarized in terms of the Euro (Deutsche Mark)
Dollarized countries have no independent monetary policies. EMU countries have no independent monetary policies. Their Central Banks have no autonomous monetary policy capability, the same as in dollarized countries like Zimbabwe, Equador and Panama.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
Dollarized countries have no independent monetary policies. EMU countries have no independent monetary policies. Their Central Banks have no autonomous monetary policy capability, the same as in dollarized countries like Zimbabwe, Equador and Panama.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
Wednesday, 13 February 2013
Unlimited credit for PIGS
America and Japan successfully use the economic policy of unlimited credit in their economies: creating inflation in the case of Japan and quantitive easing in the case of the USA. Germany used the policy of unlimited credit very successfully in the case of East Germany after unification, but refuses to agree to the ECB using it in the case of Portugal, Ireland, Greece and Spain.
Europe uses the economically destructive policy of austerity in Portugal, Ireland, Greece and Spain (PIGS).
Inflation means that where the inflation is created, i.e., where the unlimited credit or free money is injected in the economy the country receives unlimited credit at no cost while the rest of the economy (consumers) pays for it in a slight increase in prices over a single year.
The ECB should supply PIGS with unlimited credit and consumers in the European Monetary Union would pay for it in a sligth increase in prices in every transaction over a single year. This would eliminate the neccessity for disastrous bail-outs at punitive payback rates that could stretch over a number of years.
When PIGS are economically sound again, the ECB would stop the unlimited credit.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
Europe uses the economically destructive policy of austerity in Portugal, Ireland, Greece and Spain (PIGS).
Inflation means that where the inflation is created, i.e., where the unlimited credit or free money is injected in the economy the country receives unlimited credit at no cost while the rest of the economy (consumers) pays for it in a slight increase in prices over a single year.
The ECB should supply PIGS with unlimited credit and consumers in the European Monetary Union would pay for it in a sligth increase in prices in every transaction over a single year. This would eliminate the neccessity for disastrous bail-outs at punitive payback rates that could stretch over a number of years.
When PIGS are economically sound again, the ECB would stop the unlimited credit.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
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