Christine Lagarde as the “lame duck” of EURO

The ECB led by Christine Lagarde is in the interest rate trap due to inflation and is now deciding on some sort of debt union to supposedly save the euro.

At BILD, Wolfgang Bosbach and Frauke Petri openly speak of the EURO as a failed currency. The absolutely amazing thing isn’t just that it takes place on the largest private news portal in the country. Even more surprising was that none of the present talk show guests disagreed! It seems that the media wind has changed. The new inflation narrative dominates the scene. Thomas Mayer, the leading financial economist in Germany, recently had a five-minute window on ARD to explain the complicated connections between inflation, debt and falling interest rates to an older audience. Unlike biology education, it’s never too late for Mayer’s financial education.

Lagarde lame duck of the EURO

In the completely changed monetary environment, Christine Lagarde plays the role of a lame duck. Because whatever the head of the ECB does, it’s always the wrong thing: if he leaves the benchmark interest rate at zero, inflation is likely to be double-digit. The EURO will then become even softer, with devastating effects on citizens and the real economy. If the interest rate screw is significantly tightened, the rickety debt towers of the over-indebted countries of the south begin to falter. Mrs Lagarde is an educated woman. You have an intellectual background and caliber. But you know little about finance and economics. And this is a big problem.

Lagarde: total loss of credibility

Add to this the fact that Lagarde’s chain of bad decisions has triggered chain reactions in the markets, which have long shaken any confidence the markets had in the ECB’s competence. Christine Lagarde’s loss of credibility is unprecedented, almost total: First, at the end of 2021, Lagarde was wrong in her assessment that inflation was not half as much because it was only temporary. In the spring of 2022, Lagarde then lost control because she could not keep excessive inflation in check.

And now, in mid-2022, it’s giving away the last ounce of credibility because it’s reacting too hesitantly or in panic. However, Lagarde’s systematic error touches deeper layers. In this case, it not only threatens the credibility of the ECB as an institution, but also the confidence of citizens in the euro. Because money matters. And the banknote in the bag is what matters in an economy. If the value of money melts due to inflation, any monetary crisis can suddenly turn into a systemic crisis.

Lagarde and ECB between hammer and anvil

Lagarde is also a lame duck because she is under fiscal rule. The ECB has not only witnessed the insidious submission as a bailout tool for the EURO and Greece, but has actively promoted their development. Now, with Italy in need of bailouts and citizens fearing the devastating effects of double-digit inflation, it is at the mercy of political domination.

Christian Lindner summed it up in his press release after the G7 summit: “Central banks” – according to Lindner – “are very, very, very, very independent. But they also have a very, very, very large one [viermal] responsibility at this time “.

Whatever Christine Lagarde and Isabel Schnabel build with their hands in front, they basically hit their butt afterwards. Because whatever they do, they have long been trapped between the hammer of inflation and the rock of debt, according to Thomas Mayer. Mayer talks about the liralization of the euro. However, Italy’s future situation in the euro area will not be a cause for great joy and cheers. That’s why in Teutonia it won’t be as beautiful as in Italy. After all, Italy is more than North Rhine-Westphalia with the sun. A soft coin like the lira once was is not an idyll.

The ECB got caught up in a tangle of inflation and zero interest rate policy

Today, the ECB has become hopelessly entangled in a historically unprecedented chain of mistakes in a tangle of debt, zero interest rate policy and excessive inflation. The ECB will not be able to control the consequences of this unprecedented chain of errors. Rather, the mistakes of the past will dominate them from now on. If you miss the first buttonhole, you won’t be able to finish the buttoning, Wolfgang Goethe once cleverly observed.

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