The European Central Bank is expected to unveil a multibillion, if not trillion dollar, bond buying program, to save the troubled euro economy.
Quantitative easing is back, only this time in the Eurozone. But is the ECB is making the right decision? Like many other economic commentators, here at Positive Money, we think it's the wrong decision, not because it will have little or no effect, but because it won't have the right effect! QE works by pouring money into financial markets, when what is really needed is to inject money directly in the 'veins of the real economy' to address Europe's significant unemployment problem. For Europe, QE in its current form will be a huge wasted opportunity.
"The EU financial sector does not need to be eased, there is plenty of liquidity in the banks. Quantitative easing, as practised by the Bank of England and the US Federal Reserve, merely flooded the financial sector with money to the benefit of bondholders. This did not create a so-called wealth affect, with a trickle-down to the real producing economy.",writes our supporter from the Devon local group, Tony Pugh, in a letter in the Guardian, 25th Jan 2015 as a response to last week's announcement of quantitative easing programme by the European Central Bank’s president, Mario Draghi:
At the next Occupy Democracy General Assembly demonstration on the 24th January, alongside someone from the Positive Money Team I will be putting forward Monetary Reform (Democratising Money Creation/Full Reserve Banking) to be included in our Provisional List of Demands. This follows on from the workshop given by Positive Money’s Fran Boait which took place whilst being evicted en-masse from Parliament Sq. Here is her blog describing it.