Monetary policy

An ECB dead end

If you are a born optimist, you may have concluded by now that the euro crisis is over. Indeed, we have not heard much about it lately. No bailouts, no bank runs, no Greek elections. It almost feels like financial stability. If you are a realist, however, you would be looking at two figures and know that we are right in the middle of the euro crisis. [...]

Germany’s bubble economy is on borrowed time

The real problems for Germany will begin once the ECB follows the Fed’s example and tapers its monetary stimulus. But thanks to the eurozone periphery, it may take years until the ECB feels ready to take this step. In the meantime, Germany may enjoy its bubble economy while it lasts. [...]

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. [...]