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ECB's Mario Draghi has run out of magic as deflation closes in
Telegraph (UK) ^ | 09 September 2016 | Ambrose Evans-Pritchard

Posted on 09/09/2016 12:01:33 PM PDT by Lorianne

Large parts of the eurozone are slipping deeper into a deflationary trap despite negative interest rates and one trillion euros of quantitative easing by the European Central Bank, leaving the currency bloc with no safety buffer when the next global recession hits.

The ECB is close to exhausting its ammunition and appears increasingly powerless to do more under the legal constraints of its mandate. It has downgraded its growth forecast for the next two years, citing the uncertainties of Brexit, and admitted that it has little chance of meeting its 2pc inflation target this decade, insisting that it is now up to governments to break out of the vicious circle.

Mario Draghi, the ECB’s president, said there are limits to monetary policy and called on the rest of the eurozone to act “much more decisively” to lift growth, with targeted spending on infrastructure. “It is abundantly clear that Draghi is played out and we’re in the terminal phase of QE. The eurozone needs a quantum leap in the nature of policy and it has to come from fiscal policy,” said sovereign bond strategist Nicholas Spiro.

Mr Draghi dashed hopes for an expansion of the ECB’s monthly €80bn (£60bn) programme of bond purchases, and offered no guidance on whether the scheme would be extended after it expires in March 2017. There was not a discussion on the subject.

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: draghi; ecb; eucrisis; eueconomy; europeeconomy; globalcrisis; nirp

1 posted on 09/09/2016 12:01:33 PM PDT by Lorianne
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To: Lorianne

” deeper into a deflationary trap “

Actually, that’s “a deflationary reality”.


2 posted on 09/09/2016 12:11:28 PM PDT by fruser1
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To: Lorianne

Why governments do all they can to make prices rise across the board.

Inflation: the gift that never stops giving, to the government. The ruling elite has protected itself from rising prices by giving themselves “Cost of living adjustments” in their salaries and pensions. Rising prices allow the economists to crow about how the economy is “growing”, when all that is happening is that the numbers are increasing due to the decreased purchasing power of currency. The constantly decreasing value of savings tends to reduce a lifetime’s work effort to zero value. This makes the elderly, who are not allowed to work, more dependent on the government.


3 posted on 09/09/2016 12:15:35 PM PDT by I want the USA back (The media is acting full-on as the Democratic Party's press agency now: Robert Spencer)
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To: Lorianne

Call out the helicopters. They will be dropping money from them in no time.


4 posted on 09/09/2016 12:18:23 PM PDT by PGR88
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To: Lorianne
...slipping deeper into a deflationary trap despite negative interest rates...

I think I see the problem.

5 posted on 09/09/2016 12:22:08 PM PDT by Vince Ferrer
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To: Lorianne

The pro Brexit are such LOONIES !


6 posted on 09/09/2016 12:22:26 PM PDT by knarf (I say things that are true ... I have no proof ... but they're true ... and it pisses people off)
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To: PGR88

I’ve always been suspicious of the helicopters (especially the black ones) but now I’ll be waiting anxiously for my money drop.


7 posted on 09/09/2016 12:28:56 PM PDT by BipolarBob (I'm one big walking chemical reaction..)
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To: BipolarBob

More like a dump into your bank account. The europeans will of course tax it and take it right back.

There are only a few ways out of this debt time bomb for the world. Default and then start over with a gold/silver type standard. Restructuring the debt or writing huge chunks of it off as noncollectable and a return to a gold/silver standard or a debt jubilee where all debt is forgiven. If the countries do this without doing the same for their citizens debts it will end in a fiery mess. The last alternative is a world war, my monies on this one.


8 posted on 09/09/2016 12:36:21 PM PDT by sarge83
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To: I want the USA back; All

Inflation is THEFT OF VALUE
Deflation is a RESTORATION of VALUE

regarding Fiat Money

So remember kids, What’s GOOD for the Casino is BAD for the People.

and What’s GOOD for the PEOPLE is BAD for the Casino


9 posted on 09/09/2016 12:36:40 PM PDT by eyeamok (destruction of government records.)
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To: fruser1

They’ll keep pumping. Asset deflation may trigger killing each other off again.


10 posted on 09/09/2016 12:42:24 PM PDT by Read Write Repeat
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To: Lorianne

In addition to all the usual problems arising from “stimulus” through deficit spending (I’ll spare you a 20 page diatribe on that topic); there’s increasing uncertainty about what public infrastructure will be needed in the next decade or so.

For instance, it seems we’re about to enter an era of: autonomous vehicles, electric cars, more “ride-sharing” and “car sharing”, and etc. All that is going to have an impact on our infrastructure needs as profound as the effect of steam-powered trains had in their day, or the introduction of the automobile itself. Each new transportation technology has resulted in dramatic changes to the design (and size) of cities, and the relationship between cities and rural areas.

Will “stimulus-spending” mean billions on public transit, that will be obsolete before it’s built? Will it mean spending billions creating parking spaces that won’t be needed when ride-sharing increases? Who knows? Certainly not the politicians tossing the money from helicopters.

In theory (but, not in practice) deficit spending on infrastructure is fiscally sound; because we would have had to spend the money eventually anyhow. However, if we build the wrong infrastructure (obsolete long before it’s worn out); then many truck loads of money could be wasted.


11 posted on 09/09/2016 12:56:29 PM PDT by USFRIENDINVICTORIA
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To: Vince Ferrer

They know what they are doing.

Either way, they get their profits.

This way, we have less money and less power, while they still have their profits.

They hate and fear us, and wish us helpless.


12 posted on 09/09/2016 1:06:54 PM PDT by YogicCowboy ("I am not entirely on anyone's side, because no one is entirely on mine." - JRRT)
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To: sarge83

That would be nice,except what do you bet there Is no gold at ft Knox to start over with????


13 posted on 09/09/2016 1:26:42 PM PDT by Hambone 1934
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To: Lorianne

If nothing else, Mario Draghi has a great supervillain name.


14 posted on 09/09/2016 2:59:30 PM PDT by yefragetuwrabrumuy ("Don't compare me to the almighty, compare me to the alternative." -Obama, 09-24-11)
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To: Lorianne

Ambrose has been an economic Debbie Downer for years now, but this sounds pretty bad.


15 posted on 09/09/2016 3:27:10 PM PDT by sparklite2 (The game overs whether you play it or not.)
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To: Hambone 1934

“... there Is no gold at ft Knox ....”

There’s still a bit — needed to gold-plate all the tungsten.

http://www.forbes.com/sites/timworstall/2012/03/26/the-drilled-gold-bars-filled-with-tungsten/#15c1b21b27ac


16 posted on 09/09/2016 4:22:15 PM PDT by USFRIENDINVICTORIA
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