Posted Jan 22, 2015 by Martin Armstrong
The European Central Bank (ECB) kept its main interest rate unchanged on Thursday, but markets are still on edge ahead of this afternoon’s press conference, at which central bank President Mario Draghi is expected to announce a “full-blown” quantitative easing (QE). “Further monetary policy measures will be communicated by the President of the ECB at a press conference starting at 2.30 p.m. CET today,” the ECB said in a statement after announcing the rate decision.
The central bank kept its main refinancing rate at 0.05 percent, with the rate on its marginal lending facility at 0.30 percent. The rate on its deposit facility was held at -0.20 percent. This fight inside Europe is clear. The Germans disagree with creating $1 trillion euros.
It really does not matter for in the end, even $1 trillion euros will not be inflationary for the contraction appears to be massive in the area of at least $6 trillion. All they will do is try to help the banks buying in their bad sovereign debt. That money will not do back into the system to provide lending when demand for loans is still falling inside Europe.
You cannot raise taxes and hunt down money everywhere, and then expect this will not harm the economy. Without public confidence, there can be no recovery. Europe is looking at a massive decline that appears to be headed into 2020.