Europe Admits QE Has Failed, Promises More Of It

Interest-Rates / Quantitative Easing Oct 23, 2015 - 02:49 PM GMT

By: John_Rubino

New Age monetary policy has begun to resemble the form of insanity in which a patient repeats the same behavior while expecting a different outcome.

Throughout the developed world, interest rates are at record lows and central banks continue to pump out newly-created currency. Yet growth remains tepid, inflation is nonexistent and debt of every type continues to mount. And instead of recognizing that somewhere in their guiding theory lurks a fatal flaw, governments and central banks just keep upping the ante. Today it was Europe, where central banks have been expanding their balance sheets (i.e. running the printing presses) aggressively…

EU central bank balance sheet

…and forcing down interest rates…

German 2 year note

…to no avail. Europe’s inflation rate has been falling all year…

EU inflation rate

… and GDP growth remains below 1% annualized. That’s nowhere near fast enough to keep up with the accumulation of government debt and unfunded liabilities. The hole in which the EU found itself during the Great Recession keeps getting deeper despite ZIRP and QE.

EU growth rate

So what does the European Central Bank do? It promises even easier money:

The dollar spiked as the euro tanked, of course, adding to the headwinds that have caused a brutal corporate earnings season — and the emerging market/commodities complex turmoil Draghi blamed for tepid European growth. For those seeking QE’s fatal flaw, that would be a good place to start.

By John Rubino

dollarcollapse.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.