Photo: 10,000 Year Clock
A couple of nights ago we wrote about how obvious it was that the only solution that was left in Europe was the money printing solution. The ECB needs to use its unlimited balance sheet to depress interest rates on peripheral debt.The number of people who disagree with this is really shrinking.
In his latest note, Dylan Grice of SocGen says that German adherence to hard money is redolent of the mistake Germany made after the hyperinflation of the Weimar Republic, when it was too tight with monetary policy, let unemployment grow, and brewed the societal discontent that led to the Nazis coming to power.
Here’s the kicker…
So even a hard money libertarian like me can see that there have been times in history when creating inflation would have been the right thing to do. Germany today has to decide if now is one of those times.
Elsewhere, PIMCO’s Bill Gross is saying the same thing–that the ECB “Must write checks; trillion dollar ones.”
There’s almost nobody left who sees an option other than this. It’s all up to the Germans.