Quote:
Originally Posted by sikeston34m
I get the impression that many times in the past, the Government's answer to financial problems was just print more money!
What are the over all effects of this?
This appears to give the Government the ability to "bail itself out".
But.........at who's expense? What does this do long term?
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Somebody needs to forward this to the European Central Bank (ECB), as their inaction is threatening to destroy the Euro and send the region (if not world) into a depression. Hey, but they are fighting the spectre of inflation
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I don't know how many have continued to follow this, but it has all been quite facinating (altho scary and sad.)
The inherent weakness of the structure of the Euro is about to come apart. Greece almost totally F'd things up the other week, and managed to have their govt collapse over their bailout deal, and in the end were lucky to get back to where they started with the bailout terms (albiet with a new PM.)
However, they managed to freak the market out by clarifying European ineptitude, Italy's bond rates have been skyrocketing, and now their govt collapsed. Even with a new PM and austerty package, bond markets were not calmed, and now France's bond rates are moving up.
Basically no one is big enough to bail out Italy, but the ECB has to come in and be lender of last resort to ITL to stop the panic and contagion. They have to do Quantitaive Easing drive down rates for Italy by buying their bonds and guaranteeing lowered rates. Italy can afford their debt if it remains at reasonable rates. Fear of European inaction has pushed them up to a level that will create a self-fullling crisis.
The Germans are opposed in intervening as they are the main creditor nation and fear inflation, yet if they don't, German, French, US and many other banks and debt holders will suffer massive writedowns and potential insolvency if Italy defaults. Then the cards will just fall one by one until the whole Eurozone collapses and we see a depression. Its amazing to watch. Germany may do itself in because of far more trivial worries.
No one is safe anywhere. Oz, USA, Asia...
When politicians start talking about "end the Fed" and gold standard and not printing money, this is what it looks like in the present economic situation.
Bad idea.