Answer to David Folkerts-Landau on the May 5th issue of Financial Times on line (

“The ECB should change course before it is too late” is the title of the text published by the Financial Times and written by the chief economist at Deutsche Bank. You can find the article at the link shown below, the “chief economist” closes his remarks by suggesting the use of “common sense”, the abandonment of economic dogma. Here below an answer to many of the points discussed by Mr. Folkerts-Landau, trying to respect as much as possible the most common sense.


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Purchaser of last resort of sovereign debt doesn’t seem to be an odd position for a central bank, if one of its duties if to keep the financial system functioning. Structural reforms have nothing to do with the level of interest rate (an electoral reform is not driven by the level of market interest rates, the same for an innovation in the judiciary system, Some countries prefer a common law to a roman law system regardless of what their central bank is doing, an hospital, a school, a train does its duty both with high and with low interest rates). Is it a problem if the economic policy is trying to recreate real income without worrying too much of the nominal one coming from passive investments? Should the role of Europe be to accelerate bankruptcy for its weaker members? If monetary policy is considered too expansive for some economies, the local government has retained the right to act on the fiscal side to balance what is perceived as an imbalance, if the politician is not using the levers that are available only to him, then he should not blame a third one for his own irresponsible behavior. Is is not negative or positive nominal rates that affect the investment decisions of any company (not only the small ones), it is the real rates. If real rates are low, the price of one production factor is low, the first message is: use it it is cheap! If money is so cheap, even for the very long term debt, is the government that is not using the opportunity acting in  the best interest of its citizens? History of the west in the early part of last century should have thought us something (not everything) about what not to do in periods like the one we are living (slow and unclear action is one of the reasons why we are still living with this crisis when the USA has been out of it for a while). I for sure agree with one point: the central bank is for sure not in the position to solve every problem, it is time for the politicians to wake up to their responsibilities and find again the capacities that Kohl (West Mark and Ost Mark 1:1 against the will of the Bundesbank) and Schroeder (agenda 2010) have shown us in recent history. Governing by opinion polls can only deliver any country to populism. The leader that is blaming one other subject for his own failings is the facto not a leader


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