In a truly remarkable piece for the Financial Times yesterday, Wolfgang Münchau took another swipe at the Euro-sceptic and ECB-critical community in Germany, which he accuses of inflation-paranoia and of simply not getting ‘modern central banking’. Well, I know of many qualified commentators – many non-German – who swallow a tad harder when reflecting on [...]
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There was a beautiful symmetry to last week’s policy announcement by the Fed. Precisely a week after the ECB had pledged its commitment to unlimited purchases of Euro Zone government bonds, the Fed declared that its new round of debt monetization – ‘quantitative easing’ or QE3 – would be open-ended. Unlimited, open-ended. The concept of [...]
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Yesterday, the ECB pronounced itself the official lender-of-last resort to all Euro-Zone governments. To assure that the state can always borrow at conveniently low rates has been declared an essential component of ‘maintaining financial stability’ and thus a standard plank of modern central banking. Despite all their professed differences and divergent legal frameworks, all major [...]
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I am not holding my breath over the Republicans’ plans for another gold commission to investigate the possibility of returning the USA to a gold standard in the case of the Romney-Ryan ticket winning. Of course, I like the Classical Gold Standard, which existed from about 1880 to 1914, and I am convinced it was [...]
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Dear readers, first of all, apologies seem in order. An unusual gap between blog posts has appeared on the Schlichter Files this summer. The reason is that I was travelling with my family in East Africa through most of August, enjoying the spectacular landscapes and the fascinating wildlife there, and meeting some very interesting people. [...]
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On August 15, 1971, President Richard Nixon declared that the United States would no longer honour its promise to exchange US dollars held by foreign central banks for gold at a fixed price of $35 an ounce. The innocuous term ‘Nixon closed the gold window’ that is now widely used to describe this act does [...]
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Last week, the Deutsches Institut für Wirtschaftsforschung (DIW), or German Institute for Economic Research, an influential think tank, proposed an ingenious solution to the Euro Zone debt crisis. The German government should issue a Zwangsanleihe, a compulsory bond that every German with savings of €250,000 or more should be compelled to underwrite with 10 percent [...]
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On page two of today’s Wall Street Journal Europe you will find the result of a readers’ poll from last Friday: Question: Will the ECB’s rate cut help restore confidence in the bloc’s economy? Answer: 81 percent of readers say no, 19 percent yes. Last week’s round of global monetary easing – another ECB rate [...]
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UK Chancellor George Osborne and Bank of England Governor Mervin King last week announced another round of fiscal and monetary stimulus measures, including steps to ease the funding for banks and allow them to extend more loans. If these measures were hoped to instil confidence they must be classified as a failure. We have lived [...]
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In my view, there is no escaping the fact that things are not getting better. If anything, they are getting worse. Following the large swings in financial markets this past week and reading the commentary in the press, it strikes me that there is still a surprisingly strong belief out there that our fate is [...]
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Recent Comments
{ Feeding a little conspiracy theory ... considering a four-year schedule, put aside the gold standard... } – Sep 27, 3:20 PM
{ Federico, apologies for the slow response. You make a very good point. Banking systems in... } – Sep 27, 3:15 PM
{ Mr Schlichter, excellent article. I agree with previous comments to a great degree as well.... } – Sep 27, 9:16 AM
{ Richard Fisher, President of the Dallas Fed, and a member of the FOMC of the... } – Sep 27, 3:50 AM
