Bundesbank leader Jens Weidmann has been unhappy with the European Central Bank’s plan to buy sovereign debt in financially weak nations since the idea was first floated. Now, he has viciously attacked the practice in public. In his mind:
[T]he aid is able at first to rid itself of its debts while consumer demand grows strongly and fuels a strong recovery. But this later develops into inflation and the monetary system is destroyed by rapid currency depreciation.
So, yet one more banker says that inflation is a sure byproduct of aggressive monetary easing. Some members of the Fed have expressed similar opinions in the past. Weidmann, unlike his counterparts in the United States, used his comments to attack Wolfgang Schäuble, Germany’s finance minister. At least Fed members leave Tim Geithner alone.
Douglas A. McIntyre
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