Latest Fed Confab: More Bank Bailouts, Pension Raids, Taxes, Inflation

Like the Fed, the ECB may well go on a huge bond-buying spree, creating trillions of new euros. This was really not “news,” however, since Draghi and the ECB had already embarked on their QE counterfeiting gambit at least as far back as the beginning of June with their direct buying of government bonds.

Ambrose Evans-Pritchard reported for the Telegraph (U.K.) on June 4 regarding what he described as the ECB’s “revolutionary move”:

The European Central Bank has become the first of the world’s monetary superpowers to cut its deposit rate below zero, taking a leap into the unknown as it tries to drive down the euro and head off deflation.

The bank opened the door to direct purchases of private assets or quantitative easing, and announced a €400bn blast of long-term lending at cheap rates for banks.

The benchmark interest rate was cut to a record low of 0.15pc, tantamount to zero. The revolutionary move was to lower the deposit rate to -0.1pc, forcing banks to pay a charge if they continue to park money for safekeeping in Frankfurt.

But that was only the opening round, presaging much larger actions to come, as Draghi made clear. “Are we finished? The answer is no,” said Draghi. “If required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using unconventional instruments within its mandate should it become necessary to further address risks of prolonged low inflation.”

That announcement by Draghi back in June was a public signal that the ECB was on track to usurp more economic powers, as Ben Bernanke had urged it to do in 2012. (See: Europe Must Further Centralize Fiscal Power, Claims Fed Boss Bernanke.)

The ECB’s rate cuts in June caused tremors throughout the EU, especially in Germany, where Draghi’s ultra-loose monetary policy and usurpation of powers were denounced as autocratic and dictatorial.

“More and more money is not a panacea,” the Süddeutsche Zeitung editorialized. “That is a task for the politician — not the central banker.”

Georg Fahrenschon, the head of the German Association of Savings Banks, accused the ECB of raiding the savings of the thrifty. “We are tearing a hole in the pensions of savers. Over time these low rates will destroy the value of assets,” he said.

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