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Chief economist at Deutsche Bank: ECB Monetary policy has become the number one threat to the eurozone.

When reducing interest rates to historically low levels did not stimulate growth and inflation, the ECB embarked on a massive programme of purchasing eurozone sovereign debt.

But the sellers did not spend or invest the proceeds. Instead, they placed the money on deposit.

So the ECB went to the logical extreme: it imposed negative interest rates.  If this fails to stimulate growth and inflation, “helicopter money” will be next on the agenda. 

Future students of monetary policy will shake their heads in disbelief.

David Folkerts-Landau, FT 5 May 2016

Sir, David Folkerts-Landau argues that the European Central Bank has become part of the problem rather than part of the solution 

He makes some interesting arguments. Unfortunately, none of them has any foundation in economics.

When we start arguing that higher real interest rates would somehow prove expansionary — because people would feel more confident about the future — we really have gone down the rabbit hole

Richard Barwell , Steven Friedman, BNP Paribas Investment Partners, London EC2, UK

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