The choice of inflation from the ECB is disastrous for youth

Mario Draghi, the chairman of the European Central Bank (ECB) has decided to use "printing money" to resolve insurmountable debt from several European countries. This means that the balance sheet of the ECB will continue to slide into immoderation, reaching levels not seen in modern capitalist economies. It will give even thousands of billion more to help those who can not repay, including governments and other private or public institutions mismanaged.

This process is as old as the existence of money. It is printing money to pay the debts of a State and its failed banks. Moult governments have used in the past and the result was always the same: money gradually loses its value because the increase in money supply leads to higher asset prices (real estate, commodities, stocks, etc..) and consumer goods. This is a politically convenient solution in the short term but that is pushing up prices in the medium term, and ultimately erodes the purchasing power of those who are on fixed incomes. In short, what the state pays one side with money out of nowhere, he begins again with the price increase. This "monetary inflation" is a tax imposed by the ECB on behalf of the States.

Of all the possible taxation, monetary inflation is the most unequal. Indeed, the income tax is progressive and affects only the wealthiest, what is acceptable. Regarding the VAT, you just use less for less pay! She favors saving the expense of consumption. In contrast, monetary inflation created by the ECB is more deadly because it not only hampers the purchasing power of wage earners and pensioners, but it encourages owners of property by inducing an increase in financial assets. However it penalizes those who have saved for their futures and see the crumbling value of their savings. Thus, defending assets, central banks shatter confidence in any social contract, because they accuse those who are weakest and those who are more cautious.

Finally, inflation is poorly understood and this is a tax you can not handle. Today, it is unclear if all the money created world for five years will trigger inflation at 3%, 5%, 15% or 1000%, or when the inflation appear and in what area it s' speak. Property prices? Energy prices? Food prices? It just knows it will happen one day, and governments will then be mine surprised to exonerate themselves.

Monetary inflation is a tax coward, since lifting the back door, and irresponsible, since uncontrolled. We already see how the increase in central bank balance sheets for ten years creates successive price spikes far from being offset by increased revenues of European workforces. The recent example of soaring grain prices and oil should be taken as a warning: each exogenous shock, such as war in the Middle East or drought in the U.S., has a multiplied effect on prices.

That's why when we ask the ECB to intervene to offset the bank debt and state, as the U.S. or the UK, we pay for the crisis to investors but also to those who have not acquired Wealth: the youngest and poorest. This trick can work one time in a structured and united country, but it can not constitute the starting point for founding a federal Europe. The EU will not find its unity by copying the U.S. financial model completely bankrupt and generating social inequalities.

The federal Europe can not offer a less equitable than the constituent States. It will only survive if young people are doing brisk business, and for that, we must accept deflation natural heritage and therefore tolerate some states do default on their sovereign debt. In other words, accept the inevitable bankruptcy of some banks. This will result in acceleration of the financial crisis but also an outcome faster and fairer youth will be the major beneficiaries of this crisis because they can finally buy the property acquired by their parents at acceptable prices!

Boomers will be the losers, but rightly so. It is they who have created and accumulated debts of the system for thirty years without working and thrive on the laurels usurped. They will still need young people to pay their pensions and their medical expenses. The European financial crisis of our parents will have been resolved in social justice and it can serve as a democratic base for European integration. But now, our political leaders refuse sovereign defaults. They talk about the disastrous consequences which we would not survive. Everything must be put in place to prevent the crisis and thus defend the retirements of assets and their congeners. Mario Draghi is asked to intervene with his printing press. So much for inflation! Too bad for the poor! Too bad for the young! Too bad for Europe! This is a historic mistake.

Baby boomers are part of a generation that defined itself in the struggle of classes by rebelling against their elders. Their great discovery was the consumption and individual pleasure, and great political project the increase in purchasing power through debt. In the 1970s, they ruined their parents by granting itself by force of wage increases and new social protections.

Today the baby-boomers become bosses, shareholders all-out, property owners, politicians, refuse to pay their debts or having their financial assets decline because they guarantee their lifestyle. They do not increase the wages of young (less likely) because they want to preserve the margins of their businesses that provide their income. When their financial interests are threatened by the crisis, they use the state and now the ECB to protect themselves.

By refusing to accept the faults of the States, they bequeath inflation and insurmountable debts to their children. European political parties of the left who advocate for the most part the need to involve the ECB to increase inflation, must realize that the price surge is not corrected by higher wages.

Young Europeans will soon understand that the proposed economic solutions to save Europe are primarily used their forefathers. They will have lost confidence in leaders discredited and turn to political solutions, certainly alternatives, but extremist and dangerous. Europe will not survive.

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