Firing Bazookas at Financial Markets

Monday, February 29, 2016
Posted in category Economics

CNN Helicopter Money has run a headline, “Deflation is Back: Cue More Money Printing.” Consumer prices fell by 0.2% in Europe in February, inciting panic among the central banking inflationists.¬†European Central bank President Mario Draghi has promised to pump more money into the system “if necessary.” To quote:

Economists believe Draghi will fire another bazooka at financial markets when the bank next meets on March 10.

The bazookas being discussed are (a) buying more government bonds (b) cutting interest rates (which are already negative) again, and (3) buying corporate bonds. A Reuters¬†story mentions that the Euro Zone “dipped” into deflation, but it did not mention bazookas.

This is known as deflation paranoia, as noted by Frank Hollenback in this Mises Institute daily article.

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