Sunday, December 10, 2006

A Third French Leftist Complains About the ECB's Rate Raise

Jean-Pierre Chevenement, another presidential candidate from the leftist MRC Party (Citizens Republican Movement), adds his complaint to the growing list.

baby upset
[Thanks to newark.osu.edu/jsmith for the photo.]

What the people should know and don't, is that the cause of the rise in general prices is loose monetary credit on the part of the ECB. Why don't they know this? Because no one tells them; and anyway, they're not particularly interested. They go about their business, while relying on the very politicians they despise, to destroy their money supply and hence their very day-to-day living conditions. I wish I could make them more aware, get them more involved; but them's the breaks. I'm just a lonely little economic gadfly. But I digress.

According to Monsieur Chevenement, raising the European Central Bank rate to 3.5% is "dangerous," "aberrant," and "a dangerous decision for market activity and employment in Europe. Not only does the strong-euro policy penalize our exports, but it discourages investment and precipitates relocation [of companies to other economic zones.] ... Those Frankfort gnomes are guarding their revenues and asphyxiating employment.... [I]n order to move out of production stagnation in Europe and away from mass unemployment, it is urgent that we reorient Europe's construction and put in place an economic government of the euro zone." [My translation.]

Ho Hum. More vague phrases. Exactly what does Monsieur Chevenement mean by the above-mentioned "economic government of the euro zone"?

From his earlier statement, we can assume he means lowering the ECB rate, among other things, i.e. flooding the euro zone with cheap euros. Not only does he want to do this; he also wants national government officials like himself to have the power to dictate how the multiple-nation ECB manipulates the money supply. He doesn't stop to think what a flood of cheap euros will do to monetary stability and to the people's purchasing power in the longer run, because short-term booms are more advantageous to a short-term politician like himself.

What Monsieur Chevenement is recommending is age-old Keynesian economic policies (named after John Maynard Keynes) that prescribe creation of extra credit in order to sustain and encourage production and employment. These policies had been discarded by most reasonable economic scientists a long time ago, but they are now enjoying a rebirth in the platform of some economists who call themselves Neo-Keynesians. I think they will be ushered to the nearest exit again soon, or at least I hope so. But all of this goes on behind economics' closed doors.


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