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The ECB's got the formula all wrong, says Art Cashin. Despite a marginally decent bid-to-cover...

The ECB's got the formula all wrong, says Art Cashin. Despite a marginally decent bid-to-cover today in Italy's bond auction that staved off immediate disaster, they can't go through the year expanding their balance sheet and financing at these levels without concerns of inflation breaking out. ( video )
Comments (18)
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Exactly. Both the Fed and ECB have the same problem. Print massively and cause inflation (a regressive unmandated tax) or back off printing and allow a renewed recession to take hold.
    29 Dec 2011, 08:43 PM Reply Like
  • Ben Strubel
    , contributor
    Comments (113) | Send Message
     
    Where is this so called inflation everyone talks about that arises from this "money printing"? Real wages are falling, housing prices are falling, unemployment is rising.
    29 Dec 2011, 09:21 PM Reply Like
  • wolverine27
    , contributor
    Comments (412) | Send Message
     
    agreed the 3 you mention are falling while oil , food and basic good prices rise.

     

    this is a real nasty cocktail we have mixed and it cant end nicely.
    29 Dec 2011, 10:30 PM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    Anyone who shops has noticed the rise in food prices.
    29 Dec 2011, 10:34 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Ben Strubel
    Where is this so called inflation everyone talks about that arises from this "money printing"? Real wages are falling, housing prices are falling, unemployment is rising.
    ======================...
    Correct we don't have inflation
    Instead we have grocerylation, gaselation and springs in the middle East
    29 Dec 2011, 10:39 PM Reply Like
  • bkpark
    , contributor
    Comments (325) | Send Message
     
    I don't exactly see how inflation is necessarily regressive (it *is* a hidden tax).

     

    Inflation is, fundamentally, a tax on savers (especially those who get locked into a low long-term rate in the early phase of inflation when the inflation rate wasn't already baked into the interest rate). I don't see a tax on savers being regressive, seeing how savers are disproportionately wealthy.

     

    If the argument is that inflation is a consumption tax and therefore regressive, it doesn't really bear out---as there can be no high inflation without corresponding wage increase, for the working class (i.e. those who live from paycheck to paycheck), effects of inflation gets cancelled out over a moderate term.

     

    On the other hand, inflation is a boon to debtors---especially those with fixed long term rates---and those tend to be in the middle class.
    29 Dec 2011, 11:46 PM Reply Like
  • Where_Art_Thou
    , contributor
    Comments (54) | Send Message
     
    All true. Delving into the semantics, though, it's less of a tax than it is an outright wealth transfer. The real problem, though, is that the central banks are literally incapable of causing inflation now. The CBs can only act through the banking system, which is in no position to act as a conduit for CB policy in this environment. Hence why the Fed can throw everything including the kitchen sink at the economy and do nothing substantive for the real economy, good or bad. The only traditional policy that would work in a liquidity trap/balance sheet recession would be outright fiscal policy, but, paralyzed congress, etc.

     

    The Fed could always follow Greenspan's proposal to buy up mortgage debt and proceed to burn the houses down.
    29 Dec 2011, 11:52 PM Reply Like
  • bkpark
    , contributor
    Comments (325) | Send Message
     
    Hence the fear about deflation (with Japan as the cautionary tale). But then, well, "Helicopter Ben" *is* the chairman of the Fed, so if lack of inflation becomes a real problem, there are probably extraordinary measures (short of throwing newly printed fiat money out of a helicopter) they can take for reflation.
    29 Dec 2011, 11:58 PM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    It's cost-push inflation, company's costs go up, and so do their prices (wages, taxes, imports), to maintain a relative profit margin.
    30 Dec 2011, 03:19 AM Reply Like
  • jirim
    , contributor
    Comments (19) | Send Message
     
    very nice commentary, but I dont see any problem, only re-converting into recreated currencies..
    29 Dec 2011, 08:54 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Where_Art_Thou
    when the EU political union itself is at the brink of failure, when faith in democracy is degrading?
    ======================...
    if you only could show me written arrangement was made between

     

    faith in democracy from one side
    and
    EU from other side
    where faith in democracy has assigned EU to represent itself

     

    I would start believing that some time in your future you will acquire sanely way of thinking

     

    29 Dec 2011, 11:06 PM Reply Like
  • Where_Art_Thou
    , contributor
    Comments (54) | Send Message
     
    I thought that I deleted that comment of mine. Says that I did. Don't want to get into a debate with the regrettably, tragically uninformed on a financial blog of all places, but in any case,

     

    Check the third chapter of this report. Faith in democracy in the peripheral eurozone countries that have been hit hard by austerity is strongly declining.

     

    http://bit.ly/vRhJbA

     

    Cassandra was the only sane character in Agamemnon, Cody. Just keep that in mind.
    29 Dec 2011, 11:39 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Where_Art_Thou
    Cassandra was the only sane character in Agamemnon, Cody. Just keep that in mind.
    ======================...
    1 Agamemnon as boring as any other Greek tragedy
    2. Cassandra is not you( I am not 100% sure on that)
    3 Democracy and corrupted welfare-socialism State is not the same. Thing they are losing is not faith in democracy
    29 Dec 2011, 11:58 PM Reply Like
  • Where_Art_Thou
    , contributor
    Comments (54) | Send Message
     
    Keep on regurgitating the same old talking points of ignorant conservativism, Cody. Those of your ilk have been, without fail, wrong on every substantive issue for the past decade and will continue to be wrong for the foreseeable future. At what point will you sit back and take a second look at your beliefs?
    30 Dec 2011, 12:01 AM Reply Like
  • Where_Art_Thou
    , contributor
    Comments (54) | Send Message
     
    And, make no mistake. If the EMU fails, the EU itself will degrade. Relations among nations that ought to be coming together politically have been poisoned, and will be so for god only knows how long. A unified Europe, sacrificed on the altar of poor economics and ignorant economists. That is what the legacy of this currency crisis will be.
    29 Dec 2011, 11:42 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Where_Art_Thou
    You came here too late. I am here early enough to see Europe without EU
    Europe with or without EU is still Europe
    IMPO
    Europe is better off (on average at least), if every member State takes personal responsibility for own destiny

     

    Have you ever worked on collective farm ?
    30 Dec 2011, 12:09 AM Reply Like
  • Dr. V
    , contributor
    Comments (1179) | Send Message
     
    Если Америка все так плохо, почему бы не найти лучшего места?

     

    Демократия ужасно, и это никогда не работает. Мы знали, что в течение многих лет.
    30 Dec 2011, 03:25 AM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Dr. V Comments

     

    Если Америка все так плохо, почему бы не найти лучшего места?

     

    Демократия ужасно, и это никогда не работает. Мы знали, что в течение многих лет.
    ======================...

     

    Если в Америке все так плохо, почему бы не найти лучшего места?

     

    Демократия ужасна, и это никогда не работало. Мы знали это в течение многих лет.
    30 Dec 2011, 01:21 PM Reply Like
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