The euro crisis is not over and is about to get interesting … Supposedly the euro crisis is all over. The mighty ECB has spoken. I have received triumphalist suggestions from bastions of euro-fanaticism that I should now capitulate. ECB bond-buying will cut borrowing costs for ailing eurozone nations but that is not the essence of the euro problem. – Roger Bootle/UK Telegraph
Dominant Social Theme: This time the Eurocrats will get it right. Central bank bond-buying is the magic bullet!
Free-Market Analysis: Is central bank bond-buying the key that unlocks the Euro-crisis and provides a solution? Well …
We still remember the triumphant announcement several years ago that Germany's Angela Merkel and France's Nicolas Sarkozy had saved the European Union by coming up with a fund that would provide enough cash to impress upon the bond market that Europe was solvent.
We remember the breathless, behind-the-scenes reporting that Sarkozy had threatened to leave the union if Merkel didn't capitulate to his terms. Horrors!
Much has happened since then. The "sovereign" crisis spread to Portugal, Spain and Italy, and now France has just announced economic weakness. The Dutch are voting this week in an election that shall feature Eurozone issues. Even German numbers are trending toward "recession."
Meanwhile, the next big "salvaging" of the EU is to be carried out by Mario Draghi, the current head of the European Central Bank. He will buy bonds of stressed countries while removing a similar amount of currency from the larger economy in a process known as sterilization.
Of course, this brings up the question of what sterilization is and why it needs to be pursued.
Let's examine that.
The power elite that wants to run the world maintains its control via 100 or more central banks printing money from nothing. In pursuing this vast monetary price-fixing scheme these top elites have fiddled with the language of economics and even created whole new economic disciplines to justify their takeover of money.
When one looks at what we call directed history honestly it becomes fairly clear that the world's various "isms," including communism, socialism and fascism, were likely created by these same elites. It was a very clever trick! By dressing up a one-world takeover in the garb of various kinds of governmental authoritarianism the elites co-opted the conversation about freedom.
By funding surrogates like Karl Marx these elites created faux "solutions" that featured a heavy dose of government involvement in the private sector. The elites during this time (in the past 300 years) also were creating modern, monopoly central banking by integrating the printing press with gold and silver circulation.
The two trends would find maximum expression in the 20th century when elite paradigms proceeded nearly unchecked. The "Keynesianism" of John Maynard Keynes is actually far more devious than most people make it out to be. It is the most sophisticated expression of the elites' cynical governmental promotion. It weaves together socialism, central banking and government authoritarianism into one seamless, incomprehensible package.
It should be pointed out as well that Keynes was a member of the elitist Fabian society that also supported other forms of invasive fiat including the ideas of Silvio Gesell and Major Douglas. This is one reason why we've been fairly suspicious of these forms of monetary solutions.
While we do believe in monetary and currency competition, both Gesell and Douglas offered systems that really seem to need a broad-based authoritarian structure to implement.
For this reason we've not been surprised to find that the United Nations (that seems never to have met an authoritarian solution it didn't support) has been co-sponsoring such systems. You can see our articles on the UN connection to "alternative" fiat money here:
Draghi's mumbo jumbo about sterilization is just a further advancement of the various monetary memes that the elites have spread about like manure in the past century.
In this case, of course, the idea is that money is not inflationary. But if money is not inflationary, why does Draghi need to sterilize it? They can't even keep their own stories straight!
Not that it matters. Draghi CANNOT sterilize money. Nobody can. Currency has piled up in bank vaults and it will circulate when it can. Sterilization is just another nonsense Keynesian term. The idea is always to impress on people that central banking "technocrats" can manage money better than the competitive forces of the market itself.
In fact, the power elite that purveys this sort of price-fixing does not want a solution, it would seem, to the EU crisis. We know this because the agenda behind the memes the elites purvey is almost always the opposite of stated principles.
The elites promote scarcity themes. The world is said to be running out of food, water and even oil. But behind the scenes the elites are working diligently to make sure that these various scarcities are realized.
The European Union is a good example of this. There are plenty of on-the-record statements indicating that top Eurocrats wanted a crisis to further EU centralization. Bootle himself in this Telegraph article indicates his cynicism about further EU monetary solutions. He writes as follows:
Was it not to be expected that Draghi would deliver some sort of bond-buying programme? How many times since this crisis began have we supposedly been given "the solution" only to find in the succeeding weeks that it breaks in our hands?
What Mario Draghi has done is to deploy the ECB's undoubted firepower to counter break-up risk in the yields on peripheral debt. If the height of such yields were the essence of the euro problem, then ECB bond-buying would indeed be a game changer.
But it isn't. High bond yields have been a reaction to the underlying problem, not the cause of it. Indeed, the underlying problem is only partly financial. In several member countries, government finances are perilously weak. But worse than this, their economies show next to no economic growth, or are even contracting. While this continues, their debt ratios will continue to rise.
Yet their costs are stranded way above a competitive level. Consequently, they cannot overcome their problems by increasing net exports. The classic IMF cure always involved doses of austerity combined with devaluation in order to deliver an export boost to demand. European politicians have administered the first part of this treatment but the euro has prevented the second.
If that weren't bad enough for Spain, the secession of Catalonia and the Basque country is fast becoming a realistic prospect. In Italy, the technocratic government will soon have to be replaced with a democratically elected successor which might yet be headed by – you've guessed it – Silvio Berlusconi.
Meanwhile, the Greek economic situation has deteriorated and, surprise, surprise, Greece has not been able to stick to the conditions laid down in the latest bailout. It will soon need another …I rather suspect that the euro crisis is about to get interesting.
We think this is a very good analysis of the situation but we do not find it "interesting." The Euro-crisis is just more directed history, it seems. The elites CREATED the crisis with their banks, their money and their EU structure.
Now they are continually stringing it along, hanging the EU high on the gallows and choking it slowly with "solutions" that just prolong the torture. There is no intention of "solving" the problem. Four hundred million victims are to be impoverished until they are willing to trade their lives for ANY solution. Even world government.
And that is why we think a managed worldwide depression is on the way. Those who look for the EU crisis to be "solved" are probably fooling themselves. In the highest halls, the intention is for all this to go on and on and probably to get worse and worse.
This is how you build world government – on the backs of suffering masses. We will see, in this era of what we call the Internet Reformation, if such a strategy works as well as it did in the 20th century.
We're not sure it will.