ECB chief Draghi kept rates unchanged with the much heralded “wait and see” mentality which pervades central banks. He’s blown €1 trillion and expanded the balance sheet toward the €4 trillion Fed BS but lagging the world’s largest, Japan, nudging €4.5 trillion.
As the above table shows clearly-central bank policy DOESN’T work. No business confidence and no inflation is being driven even with negative rates. He should know from his native Italy that no growth for the past two quarters, 50% off store sales continuing well after the traditional period has well and truly ended and Italian banks with 20% NPLs. The lady at Fendi was in despair at how bad turnover is. A group of Italian friends asked did I think Monte Paschi dei Siena, the world’s oldest bank, would survive…I pulled a €20 note and told them that will get you around 100 shares. They got the point . Surely it will be nationalized. Of course the ECB’s policies are preventing failures?!?!!
This group think is lunacy. Even if Draghi commits to buying equities it isn’t solving for growth nor is it solving “confidence”
Whether authorities want to admit it or not, they’ve failed. More people crushed under a rock of debt or living off morsels from a pittance of supposed low risk income assets which are increasingly turning negative. While people might want to have faith in authorities the sad fact is that day-day realities have only widened income equality. The only way to get people out of the fox holes and spend that money they’re shoving in personal safes is to lower taxes and let the real economy reset by putting power back into the hands of the consumer. Stop telling them how to spend it, stop higher taxation, stop useless and ineffective state control and let all incomes benefit rather than just the rich.
The irony of the central bank bunker mentality is that while they feel immune personally to the devastation above ground they still don’t realize is that most shells falling are friendly fire.