January 18, 2011 at 8:09 pm #56068
So somehow, those smart Irish folk have found a workaround in treaties that allows them to start creating Euros out of thin air. The ECB appears to be aware of it and there are differing reports on their reaction, one says its fine, its only a few (brilliant print away) another that it has to stop.
Here is the story, also reported elsewhere
“The Irish Central Bank has crossed the Rubicon in European Union currency terms. They have printed up about 25% of their GDP in electronic credits, and stuffed those credits into their banks. These deposits, if you will, do not have new debt issued behind them.
This is a form of hyperinflation if you will, at least in context that a Central Bank, with no actual printing press, or a functioning bond market, has now electronically printed up new currency units for their banks without issuing debt behind these actions.
While this has happened before in history, it has not happened in the Euro currency project officially before today. This act is going to move the monetary policy of the union, to the individual capitals. The capacity to print electronic credits, with out the creation of cash currency or debt, is a new wrinkle in the economic landscape.
The implications and ramifications will take a while to appear, but “Mark” my words, Germany both as a people, and as a political organization will notice this event. The German people now find themselves captured in a currency where neighbors who are in political and financial stress, have the capacity to print up German Euros on demand. This is Germany’s worse nightmare as both a nation and a people. I dare say, you could not design a more frightening prospect for the “United German States”, than to find their currency diluted on demand by reckless neighbors.
In the coming weeks, and I say that because thing rarely happen quickly in life, Europe is going to have a Sovereign crisis of epic size. They will have to decide what happens next, and do so rather quickly.”
January 19, 2011 at 9:56 am #102651
Now that could definitely destroy the Euro.
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