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.