Some concepts of inflation, currency and finance ... (3 / 3)
Keywords: money, cost, Friedman, Keynes, chicago boys, monetary, Central Bank, ECB interest rates
Again, a straw-shaped beam! Look at the beautiful curves that to us (from a document BNP Paribas Resarch): that of the deviation from the objective of 4,5%, and that of the cumulative deviation from 98 (the deviation from the goal is called money gap). These curves are at the bottom of this article.
But you tell me, because since you have read Friedman and adopted his beautiful theory, if at all times and in all places, inflation is caused by too much money, then one of two things: either we had a growth stronger than 2% predicted, or we had a terrible inflation slayer pensioners beyond 2% target ...
Lost, and re-lost. On average 2% growth, and an "inflation" less than 2%. So the question to 1000 billions of euros is: but where is this money spent?
I'll help you: remember ... the way governments and central banks calculate inflation excludes strangely ... the price of real estate assets and the financial assets. Bizarre? You say strange?
If you listen to the financial circles, or read the books of some experts, it seems that the answer is clear. Yes, it is true, the planet (for it is not only Europe, it was the same story in the United States, and the whole world) would crumble under the excess of liquidity ... that is, in other words, money! To the point no longer knowing what to do! Globally, the monetary base (ie the currency issued by central banks) increases at a rate of ... 20% per year! In a nutshell, and this will undoubtedly make a back-to-back surprise to any accustomed 20 JT having well integrated the "It goes wrong, we are almost bankrupt, there is more money, France lives in above its means ". There is money, and there is too much, so much so that he no longer knows where to invest, the poor (although his playing field is now global, through free movement of capital).
Amazing, is not it? So much so that certain specialists from the seraglio (bankers like Jean Peyrelevade, former president (and straightener) of Credit Lyonnais, or Patrick Artus, chief economist of CDC Ixis) themselves start to move and draw alarm stick. Artus even speaks of "capitalism without a project", because the profits of large groups accumulate and are no longer invested ... except to redeem their own shares for considerable sums (in order to artificially maintain the profitability of the dividend for shareholder). Big groups do not know what to do with their mountains of money accumulated! As Artus pointed out in his recent book "Capitalism is in the process of self-destructing," this situation is largely due to the central banks, whose complicity, to use the term used by the author, is clear in favor of creating easy money at the origin of stock market bubbles and real estate.
Because do not believe that the ECB will go it alone in this strange paradox. Since 10 years, his American counterpart, the Fed has just helped to double the amount of dollars circulating in the world (an average increase of ... 8% annually coincidentally). As the mechanism is not ready to stop, the Fed found a radical way for us to stop coming titillate on this somewhat paradoxical: NEW! from March 23 2006, it no longer publishes the figures of money supply M3! surprising decision announced laconically and without real justification ... except the fact of not making show task: the incredible increase in the amount of money created in recent years.
For information, a little embarrassed at the frames no doubt, the ECB had announced in 2003 that the objective of mastering M3 would no longer be considered one of the pillars of European monetary policy! The only thing that remains is the control of the rattle for the crowds: the famous and so-called "inflation" (in fact redacted from what still tries: the price of financial assets and real estate as explained above). Do not be surprised if one of these days, M3 also disappears from the ECB tables ...
So here is very strange all the same and brings us back to the beginning of the story and Friedman. To prevent the State rotates printing money, some have managed from the end of 60 years, but particularly over the following decades, to remove the famous board of the hands of the people's representatives to put in safer hands ... for them. And now than done, printing money starts to turn more beautiful! Contradiction? Yes, at a minimum, but I would say more: Scam!
For who benefits from this fresh money whose ink (even virtual) is not yet dry? To those who profit from the speculative bubbles thus generated: real estate and financial assets. And let no one tell me that the first-time homeowner or the employee who owns three unfortunate shares of his company is among the winners. This is only a screen intended to justify the extent of the holdup! For of course, this new money, created let us recall the ex nihilo (from nothing then) through the credits granted to some, enters the economy by certain precise doors. It is of course the role of lending organizations (banks, for example) to sort out, a bit like a vigil (a "physiognomist") at the entrance to a discotheque. And I am not sure that the unemployed, the RMiste or a whole category of the population have the "correct dress code" required to go back. On the other hand, all the financial engineering, of a complexity that is hardly imagined, developed in recent years for the benefit of a minority of investors, is based on an inexpensive credit allowing speculation on the financial markets world in a way that the quidam struggled to imagine. This population there, suit-tie, is of course welcome to easy credit banquet.
It should be seen there obviously the latest avatar as of the historic concentration of wealth whose magnitude only increase. apparent miracle of modern finance: the more you borrow money, the more you get rich! I struggle to explain this to my old mother ... Other times, other customs are told. And other monetary system, especially. (...)
- The currency scam of creating money
- Slip curve M3 the EU zone to the objective of 4,5%:
- Curve of the Cumulative gap M3 over the goal:
- The author of these pages site
- Listen and download radio programs "Des Sous et des Hommes" in .mp3
- What the consumer price index?
- The European Central Bank website