Draghi Says ECB should examine new ideas like MMT.. (Draghi shown as devil in German newspapers!)

Mario Draghi, President of ECB appeared before Committee on Economic and Monetary Affairs of the European Parliament to discuss economic developments and ECB policy.

In one of the questions, he said ECB should be open to new ideas like MMT. He said MMT and helicopter money are more to do with distribution and this is something which becomes a fiscal task.

MMT supporters would be surprised and tell Draghi: “Told ya!”.

Bill Mitchell in this post reflects on the recent ECB monetary policy decision on 12 Sep 2019:

….the most important aspect of the ECB decision was not the monetary policy changes, which will have relatively minor impacts on the real Eurozone economy. The telling part of the whole episode was Mario Draghi’s comments on fiscal dominance. We are entering a new era where the neoliberal obsession with so-called monetary policy reliance is becoming increasingly discredited and exposed by the evidence base. Fiscal dominance is approaching. And the only body of work that has consistently argued for this approach to macroeconomic policy making has been Modern Monetary Theory (MMT) despite what the mainstream economists who are now starting to realise their reputations are in tatters might say.

Bill Mitchell also highlights how German Press has labelled Draghi as a devil:

The popular press in Germany is clearly running a campaign against the ECB.

This graphic appeared in the conservative daily German newspaper Bild-Zeitung and depicts ECB boss Mario Draghi as a blood-(saving)-sucking monster preying on the hard efforts by Germans to save.

The Bild story (September 12, 2019) carried the headline “So Draghila sucks our accounts empty. During his tenure we have lost billions”.

Choice.

The story said that Draghi was costing German savers billions in lost euros and his “monetary madness” was “devastating”.

Immediately following this rather scandalous depiction of Mario Draghi, Bundesbank boss, Jens Weidmann, gave an interview to Bild – Ist unser Geld in Gefahr? (September 13, 2019) – or “Is our money in danger?”.

The link is to the English translation provided by the Deutsche Bundesbank. Their translated version (September 14, 2019) carries the heading “Weidmann: ECB Governing Council has gone too far”. I will return to his assessment a bit later.

But the fact he gave an interview to the Bild-Zeitung soon after they had displayed Mario Draghi in that light tells you a lot about the German mentality in this respect.

Anybody else would avoid dealing with a rag like Bild-Zeitung for displaying Draghi as Dracula. Especially when, as you will see later, the German banks will be the largest beneficiaries of the changes the ECB announced last week.

Mitchell also discusses how the ECB’s new policy of two-tiered reserves will help the banking system.

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