Europe's debt manouevres, page-2

This forum looks like an echo chamber for rightwing propaganda, which is deplorable.

One of the ECB's key rates during September of this was year 4%, if I can recollect well. According to Trading Economics that same rate is forecast to fall to 1.5% by sometime during 2025, as inflation currently at 5.9% is expected to fall to 2.1% by the end of that same year.

One does not need to have an IQ of 300 in order to realize with all else being the same, that the proposed targets are expected to become easily achievable. as the cost of serving short-term debt and eventually long-term debt too (long term rates are based on short term ones) is reduced. Is Zero Hedge crying foul about that? I don't think so,

It is a well-known fact that the ECB was modelled on the German Bundesbank., and that as a result, it is one of the world’s most politically independent central banks; with a mandate focused narrowly on price stability; which means that it does not take broader economic goals like unemployment into account.

Some countries may resent that and in my opinion the concession is no more than a mixture of political posturing and the buying of some form of insurance against unexpected rate hikes. Curiously, while the concession does indeed allow for a potential easy debt reduction in 2025, it does nothing of that sort subsequently, as interest rates are expected to go down and then to plateau.

Austrian Economics states that contracyclical policies results in a credit boom and bust and that monetary policy leading to the monetization of deficits and increases in government spending leads to secular staganation (apparently no longer to hyperinflation as it used to be claimed ad nausea one and half decades ago). That is their starting point and whatever happens in Europe or elsewhere for that matter has to be a confirmation of that.

Every economist whether Keynesian or not knows that the euro works as a foreign currency, this because neither the Bank of France, nor the Bank of Portugal, nor the Bank of Italy, etc. is in position to print money.
And they also know that it is true that a country, specially under such circumstance, cannot run big budget deficits forever, because at some point interest payments start to swallow too large a share of the budget.

At some point countries must want to reverse stimulus. But they want to do at a time when the central bank can offset the effects of declining spending and rising taxes by keeping rates low, a situation that paradoxically is what is expected for the period 2025-2027.

I believe that it is important to be open-minded and to listen to opposing views in order to learn and grow.

Finally, if proof of Zero Hedge's pro Russia stand was needed, just look at their invective "and efforts to beef up Zelensky's offshore bank accounts".












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