Monday, January 17, 2011

Holy Inflation: Ireland is Printing Euros

One of the most prominent features, sold to the world, aboout the multi-nation euro was that it added discipline to the printing of money, since all nations in the euro-zone would be in on the decision of euro printing via the European Central Bank. Thus adding a drag to rapid printing. Scratch that feature.

Ireland is printing euros entirely on its own. Writes the Telegraph:
The actions of the Irish central bank are authorised by Frankfurt, but fall into a grey area of monetary policy since they appear to involve creation of money outside the normal control of the ECB's governing council.
The details of the Irish money printing are frightening for the future of the euro:
The latest data shows that Anglo Irish Bank and other lenders had borrowed €51bn (£43bn) from the Irish central bank by the end of December, under an obscure progamme listed in the balance sheet as "other assets".

This comes on top of €132bn in loans from the ECB itself, the figure normally tracked by analysts and itself 24pc of all ECB lending.

"This is a horror story: it shows the cataclysmic condition of the Irish banking system," said Tim Congdon from International Monetary Research. "The banks have borrowed €183bn in total, or 110pc of Irish GDP. They have burned through all their capital and a lot of their deposits as well. This is going to end up on the national debt".
Has Ireland found a loophole that will allow all the PIIGS to become pigs? It appears possible. If this gets out of control, it would appear that the euro-zone would have to count on such examples of fiscal responsibility as Ireland, Greece, Portugal and the like, not to take things to excess. Asking this group to maintain monetary restraint, one would think, would be like the restraint displayed by Oprah when she has a bag of marshmallows in front of her. Yikes.


  1. Just when I thought the Euro couldn't get any more dysfunctional. Should the ECB give out more of these implicit nods to monetary creation, then Ireland, Greece, and Portugal will be competing with each other to be the first to ease.

    When there is single governing body, you can at least count on some to argue for restraint. When there are four or five, inflation is a given. It's only a matter of when, so no one will be able to argue for restraint. The only stopping point will be the cost of printing money - which I've heard is as cheap as setting a few electronic bits.

  2. I am going to start my own counterfeit racket...Why them and not me? I could kill them and take their place just like "Royalty" of centuries ago. Imagine obeying someone because they wear a gold crown on their head or print unlimited amounts of "money" that they demand we all use as "legal tender"...LOL!