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Lower oil prices bolsters case for ECB QE

“The slump in global oil prices,” reports the Financial Times (1/6/15), bolsters “the case for an ambitious programme of government bond buying by the European Central Bank.”  In Germany, the Eurozone’s largest economy, consumer prices in December rose only 0.1 percent versus 0.5 percent the year to November.

As recent posts here have noted, Establishment economists now fear deflation more than inflation and, as a result,  have embraced higher prices a desirable goal.  Such reasoning embraces the worst of Keynesianism and leaves the door open to massive inflation worldwide.

The article even went as far as to say that lower prices in Spain were “worse than expected,” meaning that falling prices are bad.  Lower prices are the enemy, higher prices are our friend, so say today’s mainstream economists.

Jens Weidmann, president of Germany’s central bank, did point out that lower oil prices leaves more money for consumers to spend in other areas, which means that prices are likely to be supported as the money saved on lower oil prices circulates in other segments of the economy.

Weidmann, however, is likely to be out voted whether to implement the much anticipated ECB  quantitative easing program as other members of ECB believe that lower oil prices will lead to widespread falls in inflation.

The world has embraced massive money creation as the solution to any and all economic problems.  First it was the US Fed, then a few smaller economies, followed by Japan.  Next will be the Eurozone, possibly then followed by another bout of money by the Fed, in a never ending circle until massive price inflation is achieved.

This is an ideal environment for investing in gold and silver.

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