Inflation: ECB Propaganda vs. Reality

Like the man who leaps from the top of a building and insists, being in mid-air, that he is still doing quite well and has nothing to worry about, the governing council of the European Central Bank decided April 14 that inflation is not so high as to justify a change in monetary policy yet. (A reminder: the average inflation is 7.5% for the 19 countries of the Eurozone, with the Netherlands at 11.9%, followed by Spain at 9.8%, Belgium at 9.3%, and Germany at 7.6%, while two Baltic states, Lithuania and Estonia, are up to 15.6% and 14.8% respectively.) Therefore, there will be no early termination of its main asset-purchase program (APP) before the scheduled deadline of Q3 2022, and no early change in interest rates before “sometime” thereafter.

The ECB still claims inflation is of a “transitory” nature, with a forecast of only 6% for the Eurozone in 2022 and a “normalization” down to 2.4% in 2023.

Real data speak another language. In Germany, producer prices for March are at 30.9% on a yearly basis; this will become consumer price inflation as certainly as the amen in the Church. But even double-digit inflation in the coming months is a conservative forecast, given the real causes of inflation.

Contrary to the ECB lies that “Russia’s aggression in Ukraine” is responsible for the “surging energy and commodity prices” that are reducing demand and holding back production”, inflation is unquestionably due to the perverse monetary policy implemented by the ECB, the Federal Reserve and other western central banks.

As we have previously documented, hedge funds are making a kill on the commodity markets, with gains up to 30% in the first two months of this year (cf. SAS 13/22), while speculative flows have fed energy and commodity markets for more than a year now. The hyperinflation of financial assets is spilling over to real assets, as forecast by Lyndon LaRouche in his famous “Typical Collapse Function” chart.

As a result, the “energy poverty” announced by European Commission chairwoman Ursula von der Leyen in July 2021 has become a reality in most European countries. A report in Bloomberg on April 20, “U.K. Energy Execs Tell MPs That ‘Fuel Poverty’ Will Crush Households Into Debt”, quoted British electricity company executives saying millions of British households will stop paying their electric bills or drastically cut their use of electricity. Italian Prime Minister Mario Draghi, an “economic hitman” (according to the definition given by John Perkins), has contemptuously told Italians they should “turn off the air conditioner“ this summer, in a bad remake of Marie Antoinette’s telling the hungry mobs to eat cake.