Hi,
I have been reading on how the Fed inflates the money supply and how banks create money. However, is there a fundamental difference between the Fed and the ECB or are the US and European banking systems (and perhaps world systems) equally flawed?
Thanks.
There are some differences between the Fed and the ECB.
The ECB is a public institution. The Fed is not.
US governemnt is allowed to borrow money from the Fed directly. European governments aren’t allowed to do that.
These are to main reasons why dollar will collapse sooner than euro.
The ECB is a legitimately decentralized central bank, in the sense that no one government has enough power to influence their decisions in order to paper over local economic problems.
So in other words the euro will crash very very slowly. What sort of heirarchy is there for the ECB? When I think of the European Central Bank, I still equate it with what I know about the Federal Reserve. Surely there are some sort of high-powered figures that go to meetings all the time.
Hum, in fact, I think it is the opposite, the ECB is a heavily centralized central bank, that the European establishment elite have full power to influence and control. A bigger and centralized government will always lead in time to more tyranny. The ECB eliminates monetary competition between European states, and will not lead to less inflation in the long term. They are not at the level of the FED mad inflation yet, but the Euro zone has experienced non-negligible inflation since the last 10 years.
In order to do that, they must first get enough agreement with one another to form a unified front against the bank’s administrators.
Nicolas Sarkozy’s failed coup against Jean-Claude Trichet shows that he alone can do nothing to move the euro.
Thanks for the answers. What about the maximum deficit of 3% that is allowed for ECB countries, that would surely provide an advantage over the dollar wouldn’t it?