As European Central Bank President Mario Draghi has been promising (threatening?) for more than a year, the ECB finally is about to begin a quantitative easing program. The program most likely will run for two years.
At €50 billion a month, 1.2 trillion euros will be created “out of thin air” and used to purchase government bonds. The bond purchases will add liquidity to the financial markets, which supposedly will fillip economic activity.
The “straw that broke the camel’s back” and prompted the ECB to act was falling prices across the eurozone in December, when inflation was a negative 0.2 percent year-on-year, down from a 0.3 percent positive increase year-on-year in November. As noted in “Fear of deflation guarantees inflation,” Establishment economists fear falling prices more than rising prices.
As I’ve written on this site for years, the creation of still more fiat money has become the Establishment’s solution to any and all economic problems. Consider the following central bank QE programs: The ECB is likely to print €1.2 trillion over the next 24 months; the Federal Reserve created $3.7 trillion; the Bank of England created £375 billion; the Bank of Japan pumped an estimated ¥200 trillion into its financial markets.
In no case have the results been a resounding success; in fact, the Bank of Japan’s QE universally is considered a failure. Yet the use of QE is not questioned by Establishment economists and media. It is a given that central banks must be “more accommodating.”
The US economy is considered the world’s brightest. Yet that is debatable, with some indicators being up but anemic by what they should be coming out of a major recession. Other supposedly positive indicators are questionable, and some are downright government lies.
The foundation for massive worldwide inflation is being laid and the financial climate is perfect for precious metals investing. Adding comfort to precious metals investors should be the metals’ recent price increases that appear to have signaled an end to the three-year price correction, as predicted in “Precious metals price correction.”
There may be another dip in gold/silver prices before moving higher as moves up are never smooth in any market and especially precious metals markets. But, investors who buy at these levels will be delighted with their investments two to three years from now when still more QE programs will have been implemented and price inflation–not deflation–has become a reality.