ECB's Stark criticizes IMF special drawing rights boost

Discussion in 'Economics' started by ASusilovic, Apr 7, 2009.

  1. LONDON (MarketWatch) -- European Central Bank Executive Board member Juergen Stark, in an interview with the German business daily Handelsblatt published Tuesday, said the Group of 20's approval last week of a plan to allow the International Monetary Fund to allocate an additional $250 billion worth of Special Drawing Rights, or SDRs, was potentially inflationary. "That is pure money creation. That is helicopter money for the globe," Stark was quoted as saying. The term "helicopter money" stems from an example used by economist Milton Friedman of central bankers dropping cash from helicopters to avert deflation. The example was cited in a 2002 speech by Federal Reserve Chairman Ben Bernanke, who was then a Fed governor.{B92623E8-85EE-4B14-B4D7-5AAC20671CFC}

  2. Good ol' Juergen... Of course he's gonna say something like that. He needs to try to justify the ECB's approach in the face of almost universal criticism.
  3. Stark's last name means "Strong" in German. Maybe he's of English descent though, since the English definition of "Stark" fits him much better:

    - "severely simple"
    - "devoid of any qualifications"

  4. I don't know why you guys give him a hard time. We must remain vigilant in the face of lasting price and wage pressures!

    Or something like that.
  5. I ain't giving him a hard time. In fact, I am gonna name my firstborn Juergen!

    I see where he and other hawks on the ECB Governing Council (Weber, Bini-Smaghi, etc) are coming from. I don't necessarily disagree with their arguments, but it really worries me that they keep saying that they 'see no signs of credit contraction in Europe'. It could be that they're playing a complicated game of political cat and mouse, but if you were to take their comments at face value you'd have to conclude they're living in an alternative dimension.
  6. Yes, this is where they're coming from. Haunted by the ghosts of Weimar:


    Weber & his minions are yapping about inflating since 2005 and have never even slightly changed their rhetoric. Not even after the Summer of 2008, because that would mean admitting their own grave policy errors.
  7. Makloda,

    our interested ET audience should know the translation of the Reichsbank note you have posted :

    50 Milliarden Reichsmark = 50 BILLION