Once upon a time something good happened for Europe. The price of oil went down dramatically. When the oil price halved in the last months of 2014, there was no way for the European Central Bank (ECB) to fulfill its mandate of keeping price growth close to 2 percent a year. The ECB painted itself into a corner by targeting headline inflation, not core inflation, which excludes food and energy. Left with no choice, the ECB announced on 22nd January 2015 that it would begin printing digital money in large quantities, ie, start Quantitative Easing or QE in the near future. Contrary to popular myth, QE doesn't fight 'deflation', it rather causes it by keeping zombie banks alive. Why? Quantitative easing simply buries money in commercial bank vaults, by bolstering their balance sheets, when it is cash in circulation that is desperately needed.

What Can QE Achieve?

What does the ECB's 60 billion euros per month of bond buying, or 1.2 trillion euros in total between March 2015 and September 2016, hope to achieve? QE from the ECB won't accelerate the euro zone economy in any significant way. The ECB initiative risks delivering too little, too late, leaving the bloc struggling to grow and afflicted by deflation. Euro zone QE has already come too late to lift the region off the reefs on its own. The most dangerous challenge for the euro and the European project is not deflation but the policy of 'real', as opposed to 'perceived' austerity, which is killing growth and employment. Further, this spawns fringe political parties and movements that seek to exit from Europe altogether.

Right Answer, Wrong Question?

So, why is euro QE the right answer to the wrong question?

Read the full briefing at ATCA 5000.com.

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

www.mi2g.net

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

We welcome your participation in this Socratic dialogue. Please access by clicking here.

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2015 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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