07/17/08

As the Dollar, the Euro is being devalued

by Larry Email  207 words

If you believe, as many others, that on the wake of the Dollar debacle, the Euro might be some sort of safe haven, think twice. As the Dollar, the Euro lacks any tangible backing and any limitation in the amount that can be created ot uf thin air.

In its race to avoid a disorderly Dollar collapse, the European Central Bank is devaluing the Euro at an increasing rate, under the illusion that if both currencies lose value at similar speeds nobody will notice.

Monetary liquidity in the "Euro Zone" is increasing at an annual rate of more than 10%, slightly slower than the 14% annual rate of growth of the Dollar money supply.

Therefore, you should not be surprised when prices in Europe are on the rise: Eurostat, the European Union's statistical agency, has just reported that the year over year price inflation rate has increased to 4%, twice as large as the ECB's inflation target and a new record since the beginning of the statistic collection, in 1997.

So, there you have it. As we have said innumerable times, the solution to paper money inflation is not another unbacked paper money.

The silver bullet in this situation are tangible assets, the only protection against inflation, gold and silver preferably.

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