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Monetary policy

Who’s afraid of eurozone deflation?

By demonising ‘deflation’ (even if it is really just price stability by another name), the ECB underlines its commitment to helping the eurozone’s debtors, whether they are financial institutions or governments. The response to this so-called deflation threat will be to maintain interest rates negative or even embark on a program of quantitative easing, which may be announced over the coming days. In effect, however, such policies are just bailout programs by stealth. [...]

Why abolishing cash is not on the money

Kenneth Rogoff may be a good economist but he ignores something quite fundamental about the role of money. Cash may no longer be king, but it is a little piece of freedom we carry in our wallets. [...]

Will the Swiss drive up gold prices?

If you are a gold bug, and if you think the majority of the Swiss are too, you might want to consider adding some of the yellow stuff to your portfolio. But be careful – even in Switzerland, referenda can result in surprises, and not every opinion poll that glitters is gold. [...]

The sublime irony of Draghi’s dilemma

With all of Europe’s woes, the ECB now looks like the last institution able to move the continent’s economy. But even the ECB cannot achieve what Europe really needs to make it viable in the long run: painful but effective economic reforms. [...]

The calm before the eurozone storm

The next stages of the euro crisis are already programmed into the system. It is just a matter of time until the current period of calm ends. And though it is impossible to when we can expect the next euro storm, one thing we can say with certainty: The euro crisis is not over. Far from it. [...]

Do market fundamentals still matter?

In an ideal world, an economic liberal like myself would happily enter a debate supporting the moot that it is financial fundamentals driving investment markets. But it is not an ideal world, neither for economic liberals nor for investment markets. [...]

Behind the ECB’s smoke-and-mirror show

What we are seeing now is a continent barely held together by the monetary alchemy of its central bank. But you have to hand it to the ECB: it has developed extraordinary skills in concealing the real nature of its actions. No other central bank could so beautifully camouflage subsidies to banks and governments as help to the private sector. [...]