A scam for everyone’s taste

eSo that history repeats itself is one of the great “relative truths” because it is relative because everyone understands it this way or that, as it suits them. As it happens now with the efforts of countries to advance the economy by granting loans.

The truth is that throughout history there have been legions of nations that have suffered from financial and economic meltdowns. And they overcame them – few times they did – how and when they could: by wars, migrations, and inventions. But as humanity gets richer, humanity resorts more and more to the wrong solution of using credits which hardly solves, but postpones crises.

And now, in the first quarter of the twenty-first century, very wealthy countries of the European Union, as well as the United States in their financial sphere – have successfully solved the problem and are already living on runaway credit.

In the case of the European Central Bank (ECB) – that is, itself – it is $500,000 million. As in the United States, the sum of this European credit … corresponds to the current public debt: for the countries of the European Union, it is what the Central Bank has been buying since November 2019 at a rate of 20 thousand million dollars per month.

For the US, it all starts with raising the “debt ceiling,” a regular practice in which the US government agrees to fund itself…with debts owed to the rest of the world.

If the European operation is incompatible with one of the primary functions of the European Central Bank – the containment of inflation – and is carried out by invoking the fight against the financial crisis caused by the pandemic, as well as facing the initial negative situation in the industrialized world, in the United States the indebtedness of the country is happily increasing, which, due to its size, , to staggering numbers: $2.5 trillion.

See also  Facebook and Instagram Join LGBTQ + Pride month

Indeed, the situation on both sides of the Atlantic had entered a crisis before the pandemic, but now the epidemic is generating a temporary collapse in Europe … except for the health system in the more developed countries.

In the United States, the situation has been further exacerbated by gifts the federal government has given nearly all of the country’s citizens, which has sent at least $2,000 per citizen, tax-free, to mitigate the financial effects of COVID. And it doesn’t matter if the beneficiary is rich or poor, unemployed or working remotely from home, active or with a guaranteed pension that keeps arriving on time every month.

In Europe, the exuberance shaken by the European Central Bank temporarily covers the suffering of the poorest countries and the upward trend in stock markets almost the entire world.

It is a truism that cheap and abundant money – the so-called “newspaper money” – inevitably generates inflation, a devastating disaster for any economy. Of course, when it comes to public opinion, crises can be hidden for a while. And with time and skill, they can be overcome. When this was not the case, as in 1929, the world experienced a great economic crisis. The year 1929 was unprecedented.

It is just a moment similar to the one that occurred in the major crisis that the economies of the United States and the European Union are currently going through. Inflation in the latter is about 5% (in Germany, up to 6%), a figure more than double the reference value set by the European Central Bank itself, which is 2%. To make matters worse, the EU has been putting out more currencies in circulation over a decade than would match the overall size of national economies.

See also  13.4% of employees work 60 hours a week - Luces del Siglo

Inflation is worse on the other side of the Atlantic, at about 7% this year. Despite this, the head of the Federal Reserve (North American version of European central banks) considers it a passing problem.

Something similar to what economists at the European Central Bank think, who want to believe that inflationary pressure is still under control (eg: raising Germany’s value-added tax to pre-pandemic levels would reduce inflation by 1.25%). Perhaps this is the case in America and Europe. But they do not say how they can do this, or what measures they will adopt to counteract the increase in domestic capital generated by the pandemic, wage increases caused by inflation, and the current bottlenecks in transportation and services.

Despite this, theories explaining the new economic phase in which the world finds itself, able to withstand inflation and debt without major incidents, are still being exposed in the media specializing in diplomacy and economics.

But if the problem is common on both sides of the Atlantic, on the other hand, the European Central Bank did not give explanations for the delay in its attitude towards the Central Bank of the United States, which announced its intention. To limit the purchase of public debt from 2022.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top