OF THE
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"How could this happen?Further reading:
The answer is that a few generations' worth of 'good times' results in the above described societal deficits regarding psychological skills and moral criticism. Long periods of preoccupation with the self and 'accumulating benefits' for the self, diminish the ability to accurately read the environment and other people. But the situation is more serious than just a generalized weakness of a society that could be 'toughened up' with a little 'hard times'.
Lobaczewski writes:The psychological features of each such crisis are unique to the culture and the time, but one common denominator that exists at the beginning of all such 'bad times' is an exacerbation of society's hysterical condition. The emotionalism dominating in individual, collective, and political life, combined with the subconscious selection and substitution of data in reasoning, lead to individual and national egotism. The mania for taking offense at the drop of a hat provokes constant retaliation, taking advantage of hyperirritability and hypocriticality on the part of others. It is this feature, this hystericization of society, that enables pathological plotters, snake charmers, and other primitive deviants to act as essential factors in the processes of the origination of evil on a macro-social scale."
Aren't there other ways the E.C.B. could try to get Europe out of its low-inflation trap? There are, but Mario Draghi, the bank's president, has resisted the preferred tool of the American, British, and Japanese central banks, which is "quantitative easing," or buying longer-term securities to pump money into the financial system.If European central bankers think Europe is protected because it doesn't stoop so low as to simply print money into existence, they have another thing coming. Being so completely enmeshed in the petrodollar system means Europe will burn along with the US when the dollar collapses and hyperinflation hits the Western world. It's going to take more than tweaking interest rates, albeit in innovative ways, to pull Europe out of this fire.
It would be politically risky for the E.C.B. to buy bonds issued by European governments, a no-no in the founding mission of the common central bank. And private European debt markets are not as developed in the United States, so it would be hard for the E.C.B. to emulate, for example, the Fed's strategy of buying mortgage-backed securities that fund home loans in the United States.
That brings us back to NIRP. Now central bank watchers will get to watch yet another monetary policy experiment in an era that has been filled with them.
Comment:
Bailed-out and nationalized Royal Bank of Scotland to ignore EU caps on bonuses and pay executives 200% salary bonuses, despite 2013 company profit loss of £8 billion