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The article explains the eurozone banks' rush from Euros to Dollars by the difference in interest rates. What puzzels me is that it should be the other way arou

The article explains the eurozone banks' rush from Euros to Dollars by the difference in interest rates. What puzzels me is that it should be the other way around when you take inflation into account: Euro central bank interest rates: -0.5 % [1] Euro inflation (Nov.): 4.9 % [2] This yealds a Euro netto interest rate of -4.95 % Dollar FED interest rates: +0.05 % [3] Dollar inflation (Nov.): 6.8 % [4] This yealds a Dollar netto interest rate of -6.75 % So it seems that the real interest rate difference is aprox. 2 % in favour of the Euro. [1] The article mentions -1 %, but I couldn't find a confirmation for this. [2] https://ec.europa.eu/eurostat/documents/2995521/11563387/2-30112021-AP-DE.pdf/06bc0f6f-5d50-b220-a634-c169f61d531b?t=1638263784054 https://ec.europa.eu/eurostat/documents/2995521/11563387/2-3... [3] Per article. [4] https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi

thow-58d4e8b 5y ago
Very simple They count on the following set of assumptions: * The inflation we're seeing is transitory, and almost all of it has already materialized * FED will give in to the political pressure and increase interest rates * ECB is more isolated from politics and will not
janmo 5y ago
Inflation is calculated in a different way in the US and in the EU. If the calculation was the same, the inflation number would be quite similar.
- granzymes 5y ago
  You have that backwards, the gap actually increases. The Harmonized Index of Consumer Prices (EU-style inflation) for the US is sitting at 7.25% YoY. https://fred.stlouisfed.org/series/CP0000USM086NEST https://fred.stlouisfed.org/series/CP0000USM086NEST
rsync 5y ago
"What puzzels me is that it should be the other way around when you take inflation into account ..." You're not taking into account the very real risk that the Euro doesn't exist in 5 or 10 or 20 years. Many, many people in (PIGS)[1] do not appreciate being tied to the deutschemark. [1] No offense meant.
- bserge 5y ago
  Well, that's what victory looks like. Maybe if it was a military one, the many PIGS would've been slaughtered, but you can't do that nowadays... yet. I'm sure Doucheland is better off with those lazy subhumans in the union/eurozone than outside it, having potentially hostile nations at the border is never good.
- pjc50 5y ago
  The most plausible time for this was 2008, and despite the worst possible circumstances Greece chose not to exit.
  - ben_w 5y ago
    While I also have no reason to actually expect the Euro to disappear in such a timescale, there is a letter whose keywords I can’t remember well enough to Google, which went something like: """If you asked us what our biggest foreign policy concerns were in 1900, we would have told you to worry about war with the British Empire and keep close to France. In 1920, we would’ve been friends with the British, and Germany would be crushed and humiliated. In 1940, we’d be at war with Germany and it wouldn’t be a one-sided kerb-stomp[0], and we’d be allied with the Soviets against them. In 1970, we’d be friends with the Germans and in an Armageddon race against the Soviets. In 1985, the Soviets seemed unassailable but at least we weren’t going to blow each other into radioactive glass. In 1992, the Soviets were gone.""" [0] None of this language is an exact quote, but especially not this bit. I think the original dates were aligned on either decades or 20s of years?
- thow-58d4e8b 5y ago
  The chance of seeing Eurobonds and EU-wide unemployment fund is significantly higher than any breakup of Eurozone
deleted 5y ago
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dkjaudyeqooe 5y ago
Inflation is a positive if you're holding a currency, because that suggests interest rates will go up and that currency will yield more be more valuable. Inflation is only bad if you intend on spending that currency on goods and services affected by that inflation. Currency investors are not doing that, they'll just sell for another currency.

thow-58d4e8b 5y ago

Very simple They count on the following set of assumptions: * The inflation we're seeing is transitory, and almost all of it has already materialized * FED will give in to the political pressure and increase interest rates * ECB is more isolated from politics and will not

janmo 5y ago

Inflation is calculated in a different way in the US and in the EU. If the calculation was the same, the inflation number would be quite similar.

granzymes 5y ago
You have that backwards, the gap actually increases. The Harmonized Index of Consumer Prices (EU-style inflation) for the US is sitting at 7.25% YoY. https://fred.stlouisfed.org/series/CP0000USM086NEST https://fred.stlouisfed.org/series/CP0000USM086NEST

rsync 5y ago

"What puzzels me is that it should be the other way around when you take inflation into account ..." You're not taking into account the very real risk that the Euro doesn't exist in 5 or 10 or 20 years. Many, many people in (PIGS)[1] do not appreciate being tied to the deutschemark. [1] No offense meant.

bserge 5y ago
Well, that's what victory looks like. Maybe if it was a military one, the many PIGS would've been slaughtered, but you can't do that nowadays... yet. I'm sure Doucheland is better off with those lazy subhumans in the union/eurozone than outside it, having potentially hostile nations at the border is never good.
pjc50 5y ago
The most plausible time for this was 2008, and despite the worst possible circumstances Greece chose not to exit.
- ben_w 5y ago
  While I also have no reason to actually expect the Euro to disappear in such a timescale, there is a letter whose keywords I can’t remember well enough to Google, which went something like: """If you asked us what our biggest foreign policy concerns were in 1900, we would have told you to worry about war with the British Empire and keep close to France. In 1920, we would’ve been friends with the British, and Germany would be crushed and humiliated. In 1940, we’d be at war with Germany and it wouldn’t be a one-sided kerb-stomp[0], and we’d be allied with the Soviets against them. In 1970, we’d be friends with the Germans and in an Armageddon race against the Soviets. In 1985, the Soviets seemed unassailable but at least we weren’t going to blow each other into radioactive glass. In 1992, the Soviets were gone.""" [0] None of this language is an exact quote, but especially not this bit. I think the original dates were aligned on either decades or 20s of years?
thow-58d4e8b 5y ago
The chance of seeing Eurobonds and EU-wide unemployment fund is significantly higher than any breakup of Eurozone

deleted 5y ago

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dkjaudyeqooe 5y ago

Inflation is a positive if you're holding a currency, because that suggests interest rates will go up and that currency will yield more be more valuable. Inflation is only bad if you intend on spending that currency on goods and services affected by that inflation. Currency investors are not doing that, they'll just sell for another currency.