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The European end game—[The Macro Tourist]

Posted by Richard640 @ 18:03 on May 29, 2018  

I know we have all become somewhat immune to these sorts of balance sheet expansions. Nowadays a couple of trillion seems like no big deal, but we should be shaking our head in disbelief. Instead of screaming from the rafters about the bat-shit-craziness of the situation, we have become six-martinis-numb and just smile at the inanity of it all.

Well, here is something to think about. See that balance sheet reduction from 2012-14? That move was the primary immediate cause of the Euro crisis. That frightening market decline forced Draghi to ramp asset purchases back up, and even break the financial blood-brain barrier by lowering rates below zero. So anyone who thinks that this balance sheet expansion isn’t permanent is living in another world. Europe needs constant balance sheet expansion to avoid falling into a deflationary spiral.

The idea that Mario Draghi will retire and be replaced by a hard-money German who restores monetary responsibility is laughable. Doing so would usher in an economic depression worse than the 1930s Great Depression. Think about the economic pain Greece experienced during the past Euro-crisis (for some colour – check out this post – High Debt Levels Rant), and then apply it to almost all of Europe. The rioting would fill the streets and countries would exit the European Union faster than Amy Schumer’s movies leave the theatres.–

 

https://www.themacrotourist.com/posts/2018/05/28/italy/

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.