The view that central bank policy could be the cause of or reason for a crisis. In particular, it refers to the central bank’s high or low interest rate policy. However, there is not a single convincing empirical finding and therefore no conclusive evidence for this opinion. – It is true that a zero interest rate initiated by the central bank is highly dangerous, and the ECB in particular has been severely reproached for this since 2012. But the euro area is not in trouble because interest rates are close to zero. Rather, the central bank’s policy is addressing crisis-ridden developments in the euro area, such as a lack of competitiveness in some countries, high levels of government debt and troubled banks (floundering institutions) with a demographic burden in the foreseeable future. Certainly, improvement in the above-mentioned and other problem areas is first and foremost the task of political decision-makers in governments and parliaments. However, the central bank must at least play a supporting role through its measures. In addition, it has been shown – very clearly in the financial market turmoil that followed the subprime crisis from 2007 and spread worldwide – that in the event of political immobilism (the inaction of policy makers), the central bank alone is capable of rapid action. – See purchases, central banking, bubble, speculative, blackmail potential, ECB sin, financial crisis, avoidability, money, cheap, money inflation, money oversupply, housing bubble, lie-and-deceive thesis, quantitative easing, repression, financial, stealth policy, interest rate cut policy.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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