Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Are you familiar with "bond purchase sterilization"?

A central bank which insists on borrowing from private banks with one hand in order to buy bonds from them with the other and frets every time it fails to borrow enough is operating as if it believed that the total available number of Euros is constant. Which makes sense under a gold standard but it bizarre nonsense in a fiat currency regime.

Therefore the ECB manages the currency as if it were on a gold standard and not a fiat currency.

The macroeconomic consequences of the gold standard, of currency pegs, of the European Exchange Rate Mechanism and of the Euro are the same: recurrent devaluation crises. The Euro may yet succeed in replicating the greatest feat of the 1920s gold standard: an actual depression.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 08:12:12 PM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Top Diaries

Impeachment gets real

by ARGeezer - Jan 17
16 comments

A Final Warning

by Oui - Jan 10
105 comments

Environment Anarchists

by Oui - Jan 13
4 comments

More Spanish repression

by IdiotSavant - Jan 6
8 comments

Occasional Series