The next flood of money from the ECB is rolling in – columns

By Markus Balschzok for

The ECB announced on Thursday a further increase in its bond purchase program. The PEPP (Pandemic Emergency Purchase Program) will be expanded by EUR 500 billion to EUR 1.85 trillion and extended for a further nine months until March 2022. For all Europeans, especially the pensioners and the poorest in society, this is a catastrophe report. This and the following planned economy interventions will dissolve a large part of the purchasing power of the fiat euro and consequently also savings, as well as pension rights. Old-age poverty will rise dramatically in the coming years, while low-income earners with the same income will be confronted with sharply rising consumer prices.

The record high debt borrowing of the Berlin government and Brussels commissioners will be financed with fresh central bank money via the central banks’ printing press. Borrowing via the capital market without financing from the ECB would not be possible, as this would result in an explosion in interest rates and thus the bankruptcy of the over-indebted European Union. The only feasible way for politics to keep power and the utopia of a political European Union alive is to devalue the high debts by devaluing the currency.

At the press conference, ECB boss Christine Lagarde did not intervene verbally against the previous rise in the euro, which is why, despite the otherwise dovish press conference, it initially tended to strengthen and rose to US $ 1.216. The markets had expected a clear statement on a weaker euro and were disappointed. Although the monetary and fiscal programs in the USA have been on hold for four months, the US dollar continues to fall, which is due to the political crisis surrounding the so far undecided US election. In diametrically opposite direction, the euro recently rose to its highest level against the US dollar in two and a half years, despite loose monetary policy and new fiscal programs.


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The euro benefited from the weakness of the dollar and rose to almost $ 1.22

Lagarde forecast a shrinking European economy for the fourth quarter, which is not surprising in view of the renewed partial shutdown of the economy.

The recessive environment with the accompanying deflationary credit contraction has so far delayed an increase in inflation in the euro zone, which was -0.3% in November. This effect will not be able to dampen inflationary pressure forever and at the latest with an economic recovery in the coming year, if the economy is allowed to rebound in the face of mass vaccinations, inflation will quickly rise significantly. The ECB is lowering its growth forecast to 3.9% for 2021, which seems unrealistic. If growth can be reported, it is due to inflation that is statistically too low, which ultimately incorrectly deflates GDP. This is how growth occurs on paper while the economy remains in real recession.


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Consumer prices will soon follow the expansion of the money supply and rise sharply

The federal budgets for 2020 and 2021 amount to 1,000 billion euros, of which 400 billion euros are financed through taking on new debt. This means that around 40% of the federal budget is externally financed, which corresponds to 6% of GDP and which means that the Maastricht limit is exceeded by 100%. Value creation cannot be replaced by money creation and ultimately all Germans will become poorer through the redistribution of wealth through the inflation tax. There are only a few safe havens, such as gold and silver, as well as the mining companies that will mine these precious metals, which will be very much in demand in the future. There is still time to save wealth and savings by fleeing the euro and investing in the strongest currency in the world – gold! Don’t miss this chance – time is running out fast this year – the crisis is mounting.

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