6.3.09
Historically the Germans, a very hard working people by culture, were very prudent with money. The Bundesbank, the central bank of Germany, was almost one of the most conservative (i.e. responsible) of all central banks worldwide.
However, since the creation of the European single currency system, Germany has ceded some monetary decisions to the European Central Bank currently helmed by Jean-Claude Trichet – who at the beginning of the current financial/economic/currency turmoil appeared to be very rational and measured in his actions.
Unfortunately, in the past few months, Trichet has joined the Bank of England in an ultra-aggressive money printing orgy that has put tremdous pressure on price levels and increased the potential recklessness of those involved in the financial system as these central banks joined the US Federal reserve Bank in using printed money to purchase mortgage bonds, Treasuries, stocks, and other assets in the open market.
I thought no one outside of the wise in the financial field (including some of the folks I parade on this website frequently) would speak up about the risks – certainly no politician would since the bailouts are saving their political derrieres. However, Angela Merkel, PM of Germany has:
She, being only one so far, has spoken up. Either she is using her built in German prudence or she has wise advisors (or perhaps has been listening to Marc Faber, a Swiss German who lives in Asia, on Bloomberg) – but finally a head of state speaks sense. It is a good political move on her part because when the currency crisis fully kicks in and inflation strikes the developed world (full of purchasers of raw materials) she will look like the one-eyed man in the land of the blind.
Watching this mess play out – recent strong increase in 30 year bond/mortgage rates, price spikes in commodities, asset price inflation – has been interesting as it has been predicted by the wise for a few years now – too bad most people think in terms of weeks or months.
Chris Grande
