Breaking: European Central Bank Restarts Quantitative Easing


The Guardian:

  • Deposit rate cut by 10 basis point to -0.5%.
  • A tiering system will be introduced.
  • Forward guidance on rates is no longer calendar based but open-ended and state-dependent.
  • QE will be restarted with €20bn per month, starting 1 November. There is no end date added to QE.
  • The TLTROs will be repriced and include an incentive for banks to increase lending. Along the lines of the first two generations of TLTROs, banks which exceed the benchmark ECB loans will be charged at the deposit rate. more …

Opinion: The Trump response:

“ECB is Weakening the Euro while the Fed sits and sits”

The nations have a remedy for preventing recessions that began in the 2008-9 financial crisis:

  • Create new money to buy bonds to drive interest rates to (minus) zero
  • Deposit the new money into failing banks to avoid a run on deposits
  • Drive stock prices higher

If there is one thing I disagree with the president on it is QE. Savers are punished, the elderly are forced to take risk with savings that cannot be replaced and pension plans will be forced to slash benefits or become insolvent.

It is an illusion. Nothing is more damaging to the poor and middle class than a declining currency. It takes more and more dollars to buy goods and services.

What is so pernicious is that the end game is (sudden) hyperinflation and that is what our Bibles tells us will happen:

“When the Lamb opened the third seal, I heard the third living creature say, “Come!” I looked, and there before me was a black horse! Its rider was holding a pair of scales in his hand.  Then I heard what sounded like a voice among the four living creatures, saying, “Two pounds of wheat for a day’s wages, and six pounds of barley for a day’s wages, and do not damage the oil and the wine!” Rev. 6:5-6

A man will work a full day to have enough money to feed himself. Grocery store items will have multiple stickers each with a higher price. The rich (oil and wine) will barely feel it  until it is too late and society breaks down into chaos.