Mr Stournara’s statements in Bloomberg have been particularly careful by the markets because no Central Bankman has been so specific in his ‘foreseeings’ in current uncertainty lately. He was both specific and honest. He said three things and all three were true. He said that it is not only inflation wages that are to blame and explained that not only are wage increases lower than inflation running, but also that a large part of wages are already fed the profits of businesses (the notorious ‘inflation of greed’). He said that monetary consolidation is not only done with the interest rates that have increased, but also with the EUR 800 billion of liquidity that the ECB withdraws from the markets and the economy. How? But on one of the hundreds of billion TLTROs that banks return to the ECB and partner from the gradual reduction by a few hundred billion euros, the reinvestments of the ECB’s resources to governments through the debt market (APP and PEPP) in 2024. A total of 800 billion from TLTROS and PEPP/APP, in 2024 said Mr. Stournaras (!). There had been no such clear and accurate calculation to date. And as it is understood when 800 billion are withdrawn from the ECB, it means that multiple amounts are withdrawn from the markets and the economy as 800 billion euros have been ‘busted’ dozens of times since entering the financial system… How much is that? No one can say it accurately. And of those who could make an assessment, no one has any reason to disclose it… You will say yes, but in the ‘hole’ this falls the billions of the Recovery Fund. Indeed, but the money of the Recovery Fund, which is also “troubled”, is only a very small part of what the ECB has to withdraw – “to reduce its balance sheet”, we call it – since this year and next year. In other words, ‘loss’ in the economy does not only interest rates that are almost two points above inflation, but above all the increasing lack of liquidity, which will at some point also hit banks if no commercial property bubble fails to do so. We know – we know, Mr. Stournaras says, and that is why we have let the banks calculate what levels they need. To “self-regulation” i.e…. But that’s how they started shutting up last March in the United States and Switzerland? But Mr. Stournaras said something else very important. He said that in 2024 “in his estimation” – that is, what sounds to be discussed on the margins of the Board – two reductions should be made before summer and two after. That’s 4×0.25% in force. Why a unit? Because this will ease the real cost of money and fall from the level of 4% currently by the ECB to 3%, i.e. around the level of inflation… In other words, the ECB will raise the money by hundreds of billion behind the financial markets, but what is available on the financial markets will cost almost zero interest rates… He said everything and made it clear. And that is why markets have noticed this interview in particular because no one else from the ECB has spoken so clearly. Much more so that Mr. Philip Lane, the ECB’s chief financial analyst – the man who never makes a mistake particularly about inflation (this is the quickest joke in Frankfurt) – almost at the same time as Mr. Stournara made statements to say again the well-known “we will see…”. As a matter of fact, whoever’s burning in the soup is blowing up the yogurt that the saying says. But what does all this have to do with the gold pound and why do we put it in the game? First of all, when the cost of money changes, the price of the gold pound changes. Everything Mr. Stournaras described suggests that the ECB will attempt to make a little different “game” than the Fed, because in the US the government goes for elections and throws “money” with the sesula (through the public deficit and debt) to keep the economy in positive pace.
Because Stournaras pre-announces interest rate reduction one (!) whole unit and “revaluation” of the gold pound
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