{"id":23133,"date":"2017-03-05T19:27:45","date_gmt":"2017-03-06T00:27:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23133"},"modified":"2017-03-05T19:27:59","modified_gmt":"2017-03-06T00:27:59","slug":"how-cheap-debt-avoids-countries-of-going-bankrupt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23133","title":{"rendered":"How Cheap Debt Avoids Countries Of Going Bankrupt"},"content":{"rendered":"

How Cheap Debt Avoids Countries Of Going Bankrupt<\/a><\/h3>\n
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\"margin-debt-trading-stocks\"<\/a><\/p>\n

It\u2019s not a secret the cheap debt policy from the European Central Bank has really helped out several European countries to keep the government finances under control. Well, more or less, as several members of the Eurozone are still running huge\u00a0budget deficits<\/a>.<\/p>\n

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

Source: European Commission<\/p>\n

When the ECB was created, its\u00a0main ( and sole) mission<\/a>\u00a0was to keep an eye on the monetary policy in the Eurozone and to ensure price stability. The focus was on the inflation rate, which should be approximately 2% as that was thought to be ideal in the longer term. In order to keep the economy going and to boost the inflation rate, the ECB has started an asset purchase program just a few years ago. This would allow the Central Bank to pump more liquidity into the system.<\/p>\n

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

Source: ECB.europa.eu<\/p>\n

This plan was expected to have a \u2018trickle down\u2019 effect, but in reality most of the cash has been sticking to the wrong fingers. Banks and asset managers are benefiting, but the common man on the street doesn\u2019t notice any benefit.<\/p>\n

Au contraire<\/em>, as the requirements for mortgages are becoming more strict, and you can just forget about easy access to credit cards or personal loans.<\/p>\n

So let\u2019s be clear, the low interest rate isn\u2019t serving any other purpose than to make the institutions rich.<\/p>\n

And we aren\u2019t talking about a few billion and not even about a few hundred billion euro, as you can see on the next chart. The counter is at in excess of 1.6 trillion\u2026 and counting.<\/p>\n

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

Source: Royal Bank of Canada<\/p>\n

But perhaps more important, it also avoids the annual government budgets to fall off a cliff. In fact, even Jens Weidmann, one of the most fierce opponents of the buyback program, now expects the ECB to continue the purchase program.<\/p>\n

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

How Cheap Debt Avoids Countries Of Going Bankrupt It\u2019s not a secret the cheap debt policy from the European Central Bank has really helped out several European countries to keep the government finances under control. Well, more or less, as several members of the Eurozone are still running huge\u00a0budget deficits. Source: European Commission When the […]<\/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":[1361,9417,233,282,11136,741],"class_list":["post-23133","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bankruptcy","tag-cheap-debt","tag-ecb","tag-european-central-bank","tag-secular-investor","tag-sovereign-debt"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23133","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=23133"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23133\/revisions"}],"predecessor-version":[{"id":23135,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23133\/revisions\/23135"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}