Zipriztin ekonomikoak (17)

(i) Euroaren amaiera? (2)

Hasierarako, ikus (iv) Euroaren amaiera? (1), in Zipriztin ekonomikoak (16)

Segida:

Why new QE is deflationary and counterproductive, so it may soon be up for review1

“So far QE provided the glues and tapes to stick the broken pieces together in Europe. Now though, it seems that QE may be running out of steam. This timeline assumes just that. Next is then for us to analyse why QE may soon be up for revision, possibly phased out.

EUR Peg

Sea change ahead: QE running into a dead end

(…) the QE trick may be coming to an end, as the limits of monetary printing are getting more evident by the day, while its unintended consequences compound. This is not a European problem but rather a global phenomenon. However, its implications are the most dangerous in Europe, given the inability / unwillingness to use fiscal capacity / alternative roots.

QE has been ineffective

QE was instrumental in avoiding a short circuit in Europe (although one may argue that the ‘whatever it takes’ cheap talk had already achieved that). Still, it failed at resurrecting GDP and inflation. It may be due to one of two reasons:

(i) It was too late. Even after July 2012 ‘whatever it takes’, the ECB balance sheet was allowed to shrink by over Eur1trn (down to EUR 2trn in mid-2014), while the EUR appreciated to almost 1.40 to the US Dollar. Draghi was masterful in building consensus for QE, despite strong Weidmann-led opposition. However, inevitably, the delay had consequences in terms of jobs, GDP, industrial production, inflation.

(ii) Not accompanied by fiscal policy. Quite the opposite, German orthodoxy called for fiscal austerity, all the while as it was admitted that fiscal multipliers were underestimated (i.e. the contractionary effect of fiscal tightening on the economy). It brought up ‘internal devaluation’ in southern European countries, in itself a form of deflation.

In a 2014 research (Deflation in Europe is Just Beginning), we gave our take on the root causes of structural deflation and the flaws in the EU response.

Whatever the reason, though, QE was ineffective at its main task: averting deflation, resurrecting real or nominal GDP. Not just in Europe, but around the world.

(…)

QE alone for long is a threat to capitalism

(…)

Critically, if fiscal expansion were introduced, fiscal and monetary policies would be mutually beneficial to one another. Public spending financed by a permanent increase in the money stock would help redistribute wealth in the private sector, while also increasing the pool of safe assets, allowing for a continuation of QE without as many side effects in terms of market dislocations. QE would then be needed as fiscal expansion takes hold, so as to prevent rates from rising too much and kill any recovery to come in its infancy.

New QE is disinflationary

(…)

From now on, QE maintains income inequality at intolerable levels, while contributing to the real economy even little less than the little bit it did before. Notwithstanding the well-known fact that the typical ultimate beneficiary of QE flows is not the most inclined to spend and therefore help the real economy. The higher propensity to spend is with small uprising businesses and lower income households, whereas QE typically benefits other economic agents for most part.

Without adequate fiscal policy expansion / helicopter money, QE becomes disinflationary, as it affects return expectations on all asset classes, killing savers, making them feel poor, increasing saving propensity over consumption/investment.

QE is counterproductive

A narrative may soon emerge and affect the political debate around QE: QE proved counterproductive (see also Fasanara Interview at CNBC: “QE has proved counter-productive, and might be up for review”). (…)

To recap, QE to be joined by fiscal, or no QE at all: tertium non datur

Therefore, either QE is joined by fiscal policy / helicopter money or runs the risk of being phased out. Large risks for European financial assets loom ahead in next 12 months, as QE runs into muddy waters, the UK does fine, and election rounds take place in Italy (referendum), France, Germany. A dormant volcano, it is. (…)”

(ii) CIA eta eurogunea

L’UNIONE EUROPEA? E’ UN’INVENZIONE DELLA CIA! LO RIVELANO GLI ATTI DESECRETATI DEL “NATIONAL ARCHIVES USA” – DA SCHUMAN A MONNET: ERANO TUTTI FINANZIATI CON I DOLLARI DI WASHINGTON – PER QUESTO I SOSTENITORI DELLA “BREXIT” ORA RILANCIANO IL RAPPORTO PRIVILEGIATO CON GLI STATI UNITI2

I documenti dei National Archives Usa, desecretati negli ultimi anni, dimostrano che furono il segretario di Stato di Eisenhower, John Foster Dulles, e la Cia (Central Intelligence Agency), all’epoca diretta da suo fratello Allen, a “creare” l’Europa e a spingere la Gran Bretagna a farsi carico del disegno europeo, per giocare un ruolo antisovietico negli anni Cinquanta e Sessanta, cruciali per la Guerra Fredda.

 (…)

Tornando ai documenti dei National Archives (consultabili a questi due indirizzi web http://bit.ly/2cbxPLM e http://bit.ly/2cBi3fm), questi provano i finanziamenti al Centro studi del francese Jean Monnet, che giocò un ruolo fondamentale per far entrare nella Cee la Gran Bretagna, oltre a essere, insieme al connazionale Robert Schumann, uno dei padri fondatori dell’Europa e delle istituzioni comunitarie.

In pratica, gli atti declassificati degli Archivi Nazionali dimostrano che i servizi segreti americani organizzarono una campagna, negli anni Cinquanta e Sessanta, per porre le basi di un’Europa unita, e fondarono e diressero il Movimento federalista europeo. (…)”

(iii) GREZIA: pribatizazioak

Greece: A Country for Sale

Alexis Tsipras and his Syriza government have overseen privatizations at a scale unseen since German reunification.”

(iv) BREXIT eta Alemania

Albistea3


1 Ikus http://www.valuewalk.com/2016/09/last-act-begins-eur-peg-eur-peg-likely-break/2/ eta http://www.valuewalk.com/2016/09/last-act-begins-eur-peg-eur-peg-likely-break/3/.

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