The ECB wants more price inflation, so it has unveiled a new plan to use new, radical monetary tools. It's all very similar to the "old" plan. Except the new plan is even worse.
Those analysts that insist on following the Phillips curve in order to ascertain the future course of the momentum of prices of goods are deceiving themselves.
The outcome of today's currency race is uncertain. The credibility of the leading fiat currencies has suffered substantially. Their instability has fueled crises and weakened growth, so the demand for an alternative store of value is high.
The Fed says rate hikes are at least two years away. A lot can happen in two years, and since when is forecasting a couple rate bumps two years from now considered hawkish to the point of making the dollar pop and gold flop?
An increase in the supply of money does not necessarily cause the boom-bust cycle. It is only when more money is created out of nothing that the cycle begins.
The creation and enforcement of fiat money enables larger and more centralized government. Large government programs become possible that were not possible or sustainable under a market-chosen, sound money standard.
The last time a major central bank knowingly tried to end a low-rate policy regime occurred in Japan in the late 1980s. Since then, no central banker has wanted to repeat this unhappy experience.
