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by guiriduro
1468 days ago
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If the ECB buys the debt (it has an infinite supply of money after all), what is the problem? That should keep interest rates on sovereign debt down. Inflation right now is systemic, mainly the result of oil price surges - I'd argue that its OK, we want high oil prices because we want disincentives on activities that produce more CO2 and incentives for efficiency - hell, hike the price now. Of course the downside could be social, and that falls on governments to mitigate, which is why I argue strongly that they continue to heavily deficit spend and they get the support of the ECB to do so. |
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Which will then build up more pressure until something finally goes wrong and your economy implodes. The consequences aren't just social that the government can deal with. Look at the 1930s. There's a real chance that a poor economy for an extended period is going to change your democracy, if you remain a democracy at all.
The ECB can only buy the debt by creating more money and increasing inflation. It might be hidden for a while, but just because we don't know how to measure it doesn't mean it won't eventually show up in an unexpected place (or managing it will depress the economy long-term).