4 ms·
National debt is merely a number's game. ECB can simply eat it. They are suffering from deflation after all and they could use some inflationary move. Debt acco
by fspeech 7y ago
National debt is merely a number's game. ECB can simply eat it. They are suffering from deflation after all and they could use some inflationary move. Debt accounting for the national governments is there to enforce financial discipline in normal times. Right now it is much more akin to war time. Evenly distributing the pain through bond and currency holders will be seen as just compared to the lives that can be saved through decisive actions.
- handedness 7y agoNational debt may be a numbers game, but it's not merely that. There's nothing simple about any ECB decision on monetary policy, and the composition of the EU when combined with the nature of the Euro is such that pain almost by definition can't be evenly distributed.
- fspeech 7y agoECB already implicitly backs every country's bonds. They just need to stick to their stance. After the crisis is over there will be time to work out the cost sharing among European countries.
- handedness 7y agoThat is a completely hollow guarantee, though. The ECB's balance sheets are bad enough as it is, and one country's "cost sharing" is another country's forced-austerity to bail out another country's bad loans. The Eurosystem has serious issues that are about to get even worse. The ECB is practically insolvent by their own standards, and would be technically insolvent by American standards.