When in debt, inflate and bide time

The Bernanke school of money printing has spread its wings in a big way as the Europeans have followed in the foot steps of choosing to inflate away its debt problems and bide time rather than deal with the issue of solvency and too much debt. Banks and bondholders have now been bailed out while Greece will go thru a depression and others will see painful economic contraction. The 750b euro EURP plan (their version of TARP) will consist of 440b of loan guarantees rather than any release of cash right now, the EU will add 60b of euros to its piggy bank for emergencies and the IMF will contribute 250b euros. The ECB and individual central banks will also buy sovereign debt outright in the secondary market BUT the ECB says they will sterilize their purchases as not to increase the money supply to appease the inflation hawks and the Germans. The ECB’s purview is no longer monetary policy unfortunately and gold should be bought on all pullbacks.

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