by Ron Paul
Today European Central Bank president Mario Draghi announced that he too would follow the Fed's policy goal of striving for a two percent price inflation rate. Current central bank belief is that if this goal can be achieved, all will be well for the world economy.
My opinion is that this goal, as well as zero percent interest rates, is modern day witchcraft and will end in total failure. Draghi has promised to commit at least 1.1 trillion euros to buy financial assets to thwart the dreaded deflation monster. What he's likely to buy should not be called an "asset" since he has set the stage to buy worthless Greek bonds. But at least it will be in the spirit of our Fed's $1.7 trillion purchase of worthless mortgage-backed securities. In the not too distant future it will become quite evident that the Fed’s and the copycat ECB's monetary policy has only made the ongoing financial crisis much worse. Fiat money inflation is no substitute for sound money.
Today European Central Bank president Mario Draghi announced that he too would follow the Fed's policy goal of striving for a two percent price inflation rate. Current central bank belief is that if this goal can be achieved, all will be well for the world economy.
My opinion is that this goal, as well as zero percent interest rates, is modern day witchcraft and will end in total failure. Draghi has promised to commit at least 1.1 trillion euros to buy financial assets to thwart the dreaded deflation monster. What he's likely to buy should not be called an "asset" since he has set the stage to buy worthless Greek bonds. But at least it will be in the spirit of our Fed's $1.7 trillion purchase of worthless mortgage-backed securities. In the not too distant future it will become quite evident that the Fed’s and the copycat ECB's monetary policy has only made the ongoing financial crisis much worse. Fiat money inflation is no substitute for sound money.
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