Over half a trillion dollars a month, the European Central Bank press and pump straight into the euro zone’s banks. The aim is to get the prices of goods and services increase, which will lead to growth.
Since the 1990s builds the European financial system on economic growth by prices of goods and services rises and the the European Central Bank, ECB, the task of ensuring that this is done within the euro zone.
Unless prices increase by an average of two per cent a year, the central bank may adjust the cost for the private banks have to borrow new money from the central bank, by change the policy rate.
The ECB may also push up new money, so-called quantitative easing, QE, and pump into the banks to increase purchasing power. It is thus that it has today decided to do after the policy rate in October was lowered to 0.05 percent, the interest rate weapon now in practice is consumed.
560 billion in the month, the ECB press until September 2016. Money that goes right into the private banking system and primarily will be used as artificial respiration for countries in the euro zone, which has large and unwieldy government debt.
In the alternative, usually money of these programs end up in financial markets and in the hands of the actors who work in and near this.
Länsförsäkringar expect that today’s ruling could force even Swedish Riksbank to start printing money.
Stefan Löfven is positive to the ECB’s announcement.
– I think it is positive. It needed a puff and a boost. If monetary policy can go in and do it, it provides greater opportunities for Europe, but also Sweden, “said Löfven at the World Economic Forum in Davos
Quantitative easing
Experience from previous programs of quantitative easing, perhaps especially in the US and Japan, suggests the effect of consumption – that is the official goal of the program – is limited, so the risk is high that additional credits can be created if the goal of price increases do not is reached.
Every time this happens so does the amount of the currency is printed, and the value of existing money in the currency – in this case the euro – reduces.
In other words, quantitative easing seen as a redistribution of wealth (or tax if you like) to the banking sector and the coming circuits, from all outside sitting with assets in the currency exposed to the programs.
The ECB
European Central Bank , ECB, is since 1998 a legal entity that can act entirely independently from the other EU institutions, bodies and agencies as well as national governments and other organizations – including when in practice carrying out extensive wealth transfers the now imminent.
Bank headed by Mario Draghi, an Italian banker background includes positions as head of Goldman Sachs – a background that created some controversy when Draghi took over as Governor because Goldman Sachs was the bank that helped the Greek government to cheat with the records. Something that held until 2009 when it was no longer possible to hide the reality, which triggered the Greek debt crisis.
Draghi has also made itself controversial through membership in “The Group of Thirty” – a private lobby group funded by the Rockefeller Foundation, the world’s most influential NGOs.
involvement in a small, closed group engaged in lobbying against the financial system was particularly sensitive when it emerged that Mr Draghi has been instrumental in building up a European shadow banking sector. That is an unofficial banking system engaged in traditional banking but outside the regulation and transparency as regards the regular sector.
The US shadow banking sector was a major contributor to the 2008 financial crisis and Goldman Sachs, with Draghi at the helm as CEO and Vice Chairman 2002- 2005 had been the highest contributor.
When the Swedish government approved the new EU constitution by the so-called “Lisbon Treaty”, we committed ourselves to embrace the euro and thus the ECB.
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