The European Central Bank has to deal with the details of the financial markets in such a way that it has become a daytrader and organizes a planned economy. That said Econopolis economist Geert Noels yesterday.
The banks are still ‘too big to fail’, but much worse is that the central banks are ‘too big to fight’, said Danielle DiMartino Booth yesterday. The writer of the book ‘Fed Up’ was in Brussels for the third edition of Leergeld.eu[1], a debate series organized by the N-VA on the free money policy of the European Central Bank.
The Texan worked from 2008 to 2015 for the US central bank (Federal Reserve, abbreviated Fed) in Texan Dallas. When she left, she wrote the book and since then she has not received any postcards from her former colleagues during the holidays, she said. In ‘Fed Up’ she argues that the Fed has become an overly powerful institution that directs the economy without contradiction.
In central banks, there is an army of PhD economists working who share the same haughty belief in economic models and are too often disconnected from reality, said DiMartino Booth. According to her, since the arrival of Alan Greenspan in 1987, the Federal Reserve has been trying to disrupt the classic cycle of the economy by smoothing out the buisiness cycle, so nothing still works as it should.
The disadvantages are numerous. The free money does not go to expenses or investments, but to overpriced real estate. Companies that are ill do not go bankrupt because are kept alive with cheap money. Pensioners see the income from their savings shrink. Pension funds are forced to take greater risks than they want to reach a minimum return. In the US...