French Economy Minister Arnaud Montebourg said yesterday, “[It is] inevitable that the ECB goes even further in its non-conventional monetary policies, by finally proceeding to the purchase of public debt securities if the euro doesn’t go down and growth doesn’t return within the eurozone.”
As much as I hate to admit it, I agree with M. Montebourg. The European Central Bank will do whatever it chooses, regardless of treaties solemnly and carefully negotiated and presented to national electorates. Implicit in his statement is the overarching Keynesian assumption that prosperity will return to Europe by driving down the value of the euro in relation to all other currencies. The ECB is not alone. All central bankers are engaged in a policy of mutual self-destruction of their currencies. No one in a position of power anywhere seems to question this basic assumption. But if this assumption is correct, why did not Zimbabwe become a prosperous country by devaluing its currency, the Zim dollar?