Here the link:
https://www.bloomberg.com/news/articles/2018-01-28/ecb-s-knot-says-qe-program-needs-to-end-as-soon-as-possible
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."
The General theory of employment, interest and money (1935)
​Here is my Twitter handle: @JuliusProbst
Well, this time it's the Dutch who are criticizing ECB policy. More specifically, Knot who is head of the Dutch Central Bank calls for a more or less immediate end of the ECB's program of Quantitative Easing, never mind that the Eurozone has experienced over the last decade the largest economic downturn since the Great Depression. More recently, however, Eurozone growth has finally picked up again, not thanks to fiscal policy makers who more or less idly stood by while millions of people became unemployed, but rather because the ECB provided some desperately needed stimulus in the aftermath of the crisis. The ECB switched its gear under the brace leadership of Mario Draghi without whom the Eurozone might very well have blown up a couple of years ago when countries in Southern Europe suddenly faced a combination of a sudden stop (short run capital outflows) as well as an attack by bond market vigilantes. While real GDP growth has been quite spectacular with more than 2% on an annual basis, economies in Southern Europe are still relatively depressed with unemployment rates still at extremely elevated levels. Moreover, the ECB's mandate of price stability is defined as an inflation rate of close to 2%. Well, even though the ECB has undershot its own official inflation target for many years in a row now, some people still seem to be desperate to end its program of monetary easing, very often alluding to some risks of asset price inflation and an overheating economy. After years of stagnation, would a hot labor market and rising wages be a such a bad thing? Obviously not! How about the risk that continuously undershooting the inflation target will unanchor inflation expectations to the downside. Moreover, low inflation rates will automatically produce low nominal interest rates, meaning that the ECB had very little room to manoeuver if the Eurozone is hit by another adverse shock. Doing more now would bring about a normalization of interest rates at a quicker pace than a premature tightening of monetary conditions. Given record high unemployment in Southern Europe, low inflation across the Eurozone, and extremely timid wage increases I see absolutely now reason why the ECB should step on the brakes now.
Here the link: https://www.bloomberg.com/news/articles/2018-01-28/ecb-s-knot-says-qe-program-needs-to-end-as-soon-as-possible
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