Tag Archives: economy

The worlds biggest swindle?

Today I walked by the ECB building in Frankfurt-am-Main.
Behind the glass facade, something remarkable is going on.
They are printing money like crazy. 2 billion euro every day.
Not paper money (usually used by criminals), but real shiny electronic euros.

ECB main office in Frankfurt-am-Main (foto http://www.EurActive.com)

Corporations across Europe get to borrow this money at a below-inflation interest rate, and can purchase other companies and make all kinds of “investments” and show great profits. No wonder the stock markets are going well, and a small group of people get very rich.

I do not get to borrow money on these terms. Do you?

Therefore, this scheme gives a very large advantage to a very small group of people.

Why do we let this happen?

To put things into perspective, this scheme has been going on since May 2015, almost 30 months x 60 billion euro = 1800 billion euro.
This is as much money as existed in the euro scheme before they started with this “QE” program. (And twice as many euros as there were in 2006.)
The euro has doubled in numbers, but the underlying economy is essentially the same.
Therefore, in my simple logic, a euro is only worth half as much now compared to two years ago.
(We only see it in the domains where the richest compete – luxury apartments, fine cars, stocks, art is exploding.)

Eurosystem balance sheet. Corporate loans are the top part (purple). This graph does not include all of 2017. Today the purple part alone is 2400 billion euro. (graph from ecb.eu)

Imagine that we are a group of people in a village, each of which owns one gold coin.  We can barter in our town and after some time, we know how much stuff is worth. Suddenly one of the persons has as many gold coins as all the others together. He could then proceed to buy everything in the village, or the prices will go up to prevent this from happening.

My guess is that the corporations will use the money to buy all assets they can (shares, land, bonds), which drives up the price for everybody, and a small group of individuals will get super rich. Slowlythe prices will go up for all kinds of assets in due time. On the time-scale of pensions, half the value is now gone.

That is, if they stop the printing and just let the outstanding loans roll over indefinitely. However, there is no sign even for that. Last week Mario Draghi was telling the press that “the market needs support” and the printing continues at full speed.

Reduction of value during 30 years, we can do it in 30 months! (photo https://en.wikipedia.org/wiki/Roman_currency)

It is eerily similar to the devaluation of the Roman silver dinars during the fall of the empire. Emperors put year-on-year more tin in the coins, until the coins were just silver coated lumps after thirty years. But in a time of enterprise server stacks – we can do it in a matter of months.

Do I miss something here?

Why do we let this happen?

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