The ECB has already crushed the bond market. All those seigniorage fees have to go somewhere first, but eventually hit middle class bank accounts. As the banking network diminishes the central bank becomes blind. At this point, the ECB really has no idea what inflation is. Whatever price index the ECB matters not, what matters is the extreme effort of traders to avoid or hedge the taxes. Hence the trilemma.
This cannot last as velocity has a lower bound. Soon it is a meeting of the elders over there.
No comments:
Post a Comment