{"id":18736,"date":"2016-03-11T11:32:50","date_gmt":"2016-03-11T16:32:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18736"},"modified":"2016-03-11T11:32:50","modified_gmt":"2016-03-11T16:32:50","slug":"the-ecb-a-victim-of-its-own-ignorance","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18736","title":{"rendered":"The ECB \u2013 A Victim of its own Ignorance?"},"content":{"rendered":"
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The ECB \u2013 A Victim of its own Ignorance?\u00a0<\/a><\/h3>\n<\/div>\n
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\"Heads-Tails\"<\/a><\/p>\n

\"Mario<\/a><\/p>\n

\u201cRates will stay low, very low, for a long period of time and well past the horizon of our purchases,\u201d Draghi declared. \u201cFrom today\u2019s perspective and taking into account the support of our measures to growth and inflation, we don\u2019t anticipate that it will be necessary to reduce rates further.\u201d The ECB\u00a0cut its main interest rates to new record lows on Thursday as they continue to move into negative territory without a clue as how to reverse the trend.<\/p>\n

Beginning in\u00a0April, the ECB will buy \u20ac80 billion euros worth of bonds each month, which is an increase from the \u20ac60 billion euros presently. Draghi will keep the stimulus program running at least until March 2017. However, while he thinks simply lower interest rates will entice people to borrow, he fails to see the other side of the coin that is spinning.<\/p>\n

Lower rates rob savers of income, destroy pension funds, and leverage the debt to a dangerous level when the trend changes.\u00a0People will not borrow or spend when they have no confidence in the future and businesses will not hire or expand. You cannot stimulate the economy with lower rates while crushing it with taxes.<\/p>\n

It is true that the economic community was expecting a rate cut and more asset purchases of government debt. However, the ECB went further this time by saying it will start buying debt issued by companies as well as governments. While that\u00a0is an improvement for corporations, whom typically have to pay back their debt unlike government, there is a dark cloud behind this statement. The debt they will buy, according to reliable sources, will be\u00a0riskier debt of entities (banks) that are in trouble.<\/p>\n

\"Einsteing-thinking\"<\/a><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The ECB \u2013 A Victim of its own Ignorance?\u00a0 \u201cRates will stay low, very low, for a long period of time and well past the horizon of our purchases,\u201d Draghi declared. \u201cFrom today\u2019s perspective and taking into account the support of our measures to growth and inflation, we don\u2019t anticipate that it will be necessary […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5496,195,233,282,1044,5479,558,1389],"class_list":["post-18736","post","type-post","status-publish","format-standard","hentry","category-economics","tag-armstrong-economics","tag-debt","tag-ecb","tag-european-central-bank","tag-mario-draghi","tag-martin-armstrong","tag-negative-interest-rates","tag-nirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18736"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18736\/revisions"}],"predecessor-version":[{"id":18737,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18736\/revisions\/18737"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}