Christine Madeleine Odette Lagarde, the new president of the European Central Bank (ECB), has made it clear in a recent statement that money printing quantitative easing will run “for as long as necessary.”
“We expect net purchases to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ECB interest rates,” Lagarde said, adding:
“We intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when we start raising the key ECB interest rates.”
The ECB’sAsset Purchase Programme (APP) is part of a package of non-standard monetary policy measures that include net purchases of securities. As in, ECB buys stocks to the tune of billions.
“We expect ECB interest rates to remain at their present or lower levels until we have seen the inflation outlook robustly converge,” she said.
With the message so being a continuation of a negative interest rates environment and an increase in inequality due to a key problem.
While the work of ECB is complex, their job is basically to manage money supply so that it falls in value only by 2% a year.
They do this through a complex process of fiat block creation that burns the capital while turning interest payments into money.
So we have a €10 at 5% interest. We pay back €10.50. €10 is burned, but the 50 cent becomes real money. In crypto language, 50 cent is the block reward created from nothing.
Who gets this block reward is a question they won’t answer because the answer is most likely banks.
That has given rise to this idea of Modern Monetary Theory which says why give it to banks instead of the government?
Those that currently benefit from the system argue banks are more decentralized and the independence of the central bank is sacrosanct as otherwise the government would hyper-inflate.
Those against say this creates a money system outside of the jurisdiction of the elected in a way that coopts the government by the banks which then impose austere measures to get the people to pay with real value this “block reward.”
Independents would say the matter is complex, but to begin addressing it rationally, central bankers must officially explain just what is the block reward in fiat money, who does it go to, how, under what conditions, and of course why.
That’s especially important as the global protests have shown the people are no longer willing to accept any increase of the burden either through explicit or implicit taxation.
As such, if there is to be money printing for good reasons then the people have to be persuaded such money goes to them, not to those that are printing it.