Posted on 03/22/2023 5:04:45 AM PDT by Oldeconomybuyer
BERLIN (Reuters) -Germany's economic council on Wednesday warned that inflation could remain high for longer or even pick up again if financial market worries prevent central banks from raising interest rates.
"The recent increase in financial market risks has made it more difficult for central banks to fight inflation," the five "wise ones" who advise Berlin on economic policy said in their biannual report.
"If the monetary policy response is too weak due to these trade-offs, inflation could remain high for longer than expected or even pick up again," they added.
Commenting on recent turmoil in the banking sector at a press conference on Wednesday, council member Monika Schnitzer said banks had to be monitored with frequent stress tests. She added that regulators should examine whether government bonds held by banks should be backed by equity capital.
(Excerpt) Read more at uk.finance.yahoo.com ...
The business cycle demands occasional crashes. The business cycle cannot be denied. Crashes clean out the dead wood and make society stronger.
mebe low inflation will now be transitory
Banks should be investing in businesses and people and not 1.65% bonds.
Your basic rock and your basic hard place.
The western world has a bunch of dummies and criminals running and ruining life for people.
We need to call the Orkin man. The clean out the cockroaches.
The US Federal Reserve and other Central Banks are in a real bind, the solution typically for inflation is to raise interest rates, doing that causes the massive number of US Treasuries owned by banks to become junk bonds and making the banks insolvent. If they don’t continue to raise rates or actually lower rates, it will keep inflation higher and possibly cause inflation to accelerate again.
The banks were stupid, and they were putting their money in ESG initiatives that were pure waste, not investment.
As for depositors with accounts with more than $250K, there’s a sign in every single insured bank warning you against putting a penny more than that in the bank.
Just enforce the laws and policies on the books and let the chips fall where they may.
And hike the interest rate, because you get a twofer here:
1. Attempts to control inflation
2. Attempts to control moral hazard
Wow. They’re geniuses. I’m not German, but I must also be a wise guy, because I’d already figured this out also
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