Trésorier magazine - n°79 - 3ème trimestre 2012 - (Page 13)

One of the cruxes of the Euro crisis is related to the mandate of the European Central Bank (ECB). The latter, declared independent from government authorities, inexorably proceeds with its inflation control mandate, the tolerance threshold of which has been fixed at 2%. The pulley that the ECB uses to control inflation rates are its intervention rates, the modifications of which are reflected in interest rate structures of the whole economy. T he ECB mandate differs singularly from the one of the American Federal Reserve (FED) that pilots, in a more interventionist and simultaneous way, price levels and economic activity, the latter itself being reflected in unemployment rates. Political economically, the FED is a more active tool than the ECB. Why then such a mandate difference between two comparable establishments? The reason is essentially Germany’s fear (undoubtedly justified) to see its Deutsche Mark, transformed in the Euro, being subjected to successive devaluations by regularly calling upon the ECB. The latter should have regularly increased monetary mass to respond to the budgetary and commercial deficits of the Eurozone’s weakest partners. However, apart from this German political demand, there is something else: the Germans believe public debts need to be financed by savings that have to maintain their purchasing power themselves. On the contrary,The United States consider that public debts can be paid with monetary creation. This opposition reflects antagonism between Germany’s Lutheranism and America’s Monetary Paganism. The German currency is hoarded, while the dollar is nothing but transactional. Since the inflation of the Weimar Republic (1923) and the confiscation of 94% of their belongings during the replacement of the Reichsmark by the German Mark in 1948, the Germans demand a strong, deflated and disciplined currency. Contrarily, the Americans feel that monetary value is nothing but a secondary factor to create employment. Across the Atlantic, money printing is thus more operational and less sacred. Moreover, compared to the euro, the dollar depreciated by 100% between the end of 2000 and mid-2009. Nevertheless, the ECB today faces serious challenges. Is it acceptable that the ECB confines itself to fighting against inflation while European economy has fallen into recession and the weak states, that are imposed mortal austerity, no longer succeed in financing themselves under tenable conditions? Why isn’t it 13 FOCUS The ECB’s monetary protestantism

Table des matières de la publication Trésorier magazine - n°79 - 3ème trimestre 2012

EDITORIAL - Has the financial world gone mad?
INTERVIEW - Tanguy du Monceau, co-fondateur CO2logic

Trésorier magazine - n°79 - 3ème trimestre 2012