In relation to public debt, through the issuance of more and more new securities, the practice, common in Italy until 1981, of having the central bank buy all the pieces that could not be accommodated on the market at the fixed price and put them in its portfolio. In this way, monetary policy became subordinate to fiscal policy; inflation accelerated and the ITL had to be devalued several times. The real economic causes of the downward spiral, namely excessive government spending (overspending) and neglect of imperative adjustments (under-reforming), were not addressed in this way. – See purchases, central banking, buyer of last resort, one-vote principle, European Monetary Union, fundamental error, ECB sin, Friedman thesis, money multiplication, monetary union-internal, Greek crisis, peer pressure, cash credit, credit, titrated, monetarists, repression, financial, rescue package, seat-order dispute, structural reforms, southern front, redistribution, central bank-induced, interest rate smoothing. – Cf. Monthly Report of the Deutsche Bundesbank of October 2012, p. 27 f. (a central bank must not assume a “quasi-fiscal role”).
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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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