In Europe a record fuel price marks the offensive of
inflation against the savings and salaries of people. The absolute record is in
Turkey with €2,24 per liter
of unleaded gasoline that means about $10 per gallon. In Germany the price of 1
liter is €1,60 that is almost
$8 per gallon. And that is just the beginning. In Germany strong inflationary
fears are appearing - for the first time since the end of WW2 and the creation
of the famous Deutsche Mark. Bundesbank warned of this and requested a reverse
of the ECB printing money policy. In answer the ECB boss Mario Draghi said it
is too early to do this. In fact ECB is in break of its own rules to keep under
2% inflation, as the official rate is 2,6%. The real inflation is much higher.
In other times there would be a serious reaction immediately. But now we see keeping
the record low interest rates of 1% and indirect buy-government-bonds programs
by the Central bank. In fact ECB is between a rock and a hard place. It must
fight inflation and fight with high interest rates on EU government debt. The
ECB is blocked to act by the enormous government's debts in EU that will
bankrupt entire countries if interest rates rise. So in fact ECB can not act.
The only thing they can do is to speak and to try to scare the inflation by
verbal methods. And that is what in fact happens. They are talking against
inflation, while creating inflation to keep indebted governments alive. Not
much different than in US...
Dobri